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Key Findings Details

Induced Entry into the Social Security Disability Program: Using Past SGA Changes as a Natural Experiment
Nicole Maestas, Kathleen Mullen and Gema Zamarro
WP 2012-262

  • We find that increases in the real threshold for Substantial Gainful Activity (SGA), relative to local (state-level) average wages, are associated with significant increases in SSDI application rates.
  • Our preferred estimates imply that the 1999 increase in the nominal SGA threshold from $500 to $700 led to a 4.7% increase in SSDI applications, or 0.2 new applications per year per 1,000 individuals.
  • Our theoretical framework suggests that this estimate is likely to be a good approximation of potential induced entry from a $1 for $2 benefit offset if the marginal SSDI applicant has low potential wages.