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Do Stronger Age Discrimination Laws Make Social Security Reforms More Effective?

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Abstract

Supply-side Social Security reforms to increase employment and delay benefit claiming among older individuals may be frustrated by age discrimination. We test for policy complementarities between supply-side Social Security reforms and demand-side efforts to deter age discrimination, specifically studying whether stronger state-level age discrimination protections enhanced the impact of the increases in the Social Security Full Retirement Age (FRA) that occurred in the past decade. The evidence indicates that, for older individuals who were “caught” by the increase in the FRA, benefit claiming reductions and employment increases were sharper in states with stronger age discrimination protections.

Key Findings

  • Using Health and Retirement Study data with linked Social Security Administration records, we find that 28 percent of individuals who experienced a work limitation while employed received an accommodation.
  • The probability of receiving an accommodation increased in the post-1992 period following the implementation of the Americans with Disabilities Act.
  • Our estimates confirm that accommodation effectively reduces the probability of application for SSDI following the onset of a work limitation.
  • Providing an employee with an accommodation after the onset of a work limitation would reduce applications to the SSDI program by 27 percent within a year and 30 percent within five years of onset.
  • These findings suggest that the provision of workplace accommodations would be an effective strategy for reducing applications for SSDI benefits, and potentially the number of people receiving SSDI.

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Project

Paper ID

WP 2011-249

Publication Type

Working Paper

Publication Year

2011