The Effect of the Disability Insurance Application Decision on the Employment of Denied Applicants
AbstractSocial Security Disability Insurance (SSDI) affects the labor supply of applicants through its work discouragement and through human capital deterioration regardless of the ultimate acceptance or denial of the claim. In this paper, I provide an estimate of the causal effect of SSDI application on denied applicants using non-applicants as a comparison group. Exploiting instrumental variable approach, I find that the SSDI causes a 36 percentage point reduction in employment of the denied applicants of ages 50 to 58 in the short run. The loss of potential employment of the denied SSDI applicants is a welfare loss to the society.
CitationKhan, Mashfiqur R. 2018. "The Effect of the Disability Insurance Application Decision on the Employment of Denied Applicants." AEA Papers and Proceedings, 108: 267-71. DOI: 10.1257/pandp.20181046
- G22 Insurance; Insurance Companies; Actuarial Studies
- H55 Social Security and Public Pensions
- J14 Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination
- J22 Time Allocation and Labor Supply