Volume 12 Issue 1 - May 2011
2010 Key Findings on Disability
How Common is "Parking" Among Social Security Disability Insurance (SSDI) Beneficiaries? Evidence from the 1999 Change in the Level of Substantial Gainful Activity (SGA)
by Jody Schimmel, David Stapleton and Jae Song
- We estimate that 0.2 to 0.4 percent of disability beneficiaries "parked" their earnings below the $700 "substantial gainful activity" cap during 2002-2006.
- Those who park keep earnings low in order to retain disability benefits.
- The fraction of beneficiaries who park earnings is large relative to the number of individuals whose benefits are suspended because of work in a typical month (0.5 percent) or terminated in a typical year (0.5 percent).
Reconciling Findings on the Employment Effect of Disability Insurance
by John Bound and Timothy A. Waidmann
- Over the last 25 years, the Social Security Disability Insurance Program (DI) has grown dramatically. During the same period of time, employment rates for men with work limitations showed substantial declines in both absolute and relative terms.
- While these trends coincide, we find that the decrease in employment among those with work limitations during the early 1990s can only be partly explained by the growth of DI.
- For the period after the mid-1990s, we find little role for the DI program in explaining the continuing employment decline for men with work limitations.
The Social Security Early Retirement Benefit as Safety Net
by John Bound and Timothy A. Waidmann
- We use Health and Retirement Study data to analyze the health and economic status of those who apply for early retirement benefits and find that 1 in 5 of early retirees match the characteristics of Disability Insurance recipients.
- The pattern of using early retirement benefits as a response to poor health is most evident for men and unmarried women. Married women who retire early appear to weigh other factors in that decision.
- Early Social Security benefits likely provide a safety net for those in poor health, who are either not in poor enough health to be eligible for disability benefits or who, for whatever reason, did not apply for them.
- If the early retirement age for Social Security were to increase without an alternative safety net in place, it seems likely that this group of early retirees who are least able to work would either attempt to qualify for DI or face substantial income losses.
Does Disability Insurance Receipt Discourage Work? Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt
by Nicole Maestas, Kathleen Mullen and Alexander Strand
- We match SSDI applicants to disability examiners, and use systematic variation in allowance rates by disability examiner that is uncorrelated with individual applicants’ severity in order to estimate the labor supply effects of SSDI.
- The labor force participation rate of the marginal entrant would be on average 21 percentage points greater in the absence of SSDI benefit receipt. The likelihood of engaging in substantial gainful activity as defined by the SSDI program would be on average 13 percentage points higher, and he or she would earn $1,600 to $2,600 more per year on average.
- The disincentive effect of SSDI on labor force participation varies, ranging from 10 percentage points for those with more severe impairments to 60 percentage points for entrants with less severe impairments.
Protecting the Household Incomes of Older Workers with Significant Health-Related Work Limitations in an Era of Fiscal Responsibility
by Jody Schimmel and David Stapleton
We consider three work-support options to encourage and help workers keep working if they can, perhaps with reduced hours or at lower paying jobs.
- An expanded earned income tax credit (EITC), comparable to the credit currently available to parents with three children
- An employment support allowance (ESA) -- a payment to eligible workers provided that they do not apply for SSDI benefits
- A health insurance subsidy comparable to that specified in the Affordable Care Act (ACA) for those who purchase insurance through a health insurance exchange " an option that will presumably become available to all persons without employer coverage as health care reform is implemented
Work-support options, on average, would cost less per capita than SSDI benefits, especially if the ACA health insurance subsidy is already in place. The relative cost of these options is even lower once the cost of Medicare for SSDI beneficiaries is factored in.
These options would reduce poverty among the families of qualified workers -- by 80 percent under the most costly option.
The Labor Supply Effects of Disability Insurance: Evidence from Automatic Conversion Using Administrative Data
by Nicole Maestas and Jae Song
- Surprisingly, labor supply increases when the strict DI work rules are abruptly relaxed as DI beneficiaries age out of the DI program at their Full Retirement Age (FRA) and are automatically converted to the OA program.
- The increase in labor supply is pronounced for DI beneficiaries with recent work activity, and is evident in terms of both labor force participation and earnings.
- An increase in labor supply at FRA is evident for beneficiaries with recent work activity in the six largest impairment categories, and particularly those with musculoskeletal or mental disorders.