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Key Findings Details

Spousal Labor Supply Responses to Government Programs: Evidence from the Disability Insurance Program
by Susan Chen
WP 2012-261
  • Husbands’ Disability Insurance (DI) receipt has a small crowd-out effect on their wives’ labor supply.
  • Husbands’ DI receipt crowds out wives’ labor force participation by about 8 percent and earnings by $2,200 for up to 5 years after the disability determination.
  • For a sample of wives whose husbands are homogeneous in terms of the severity of their health conditon, the estimates of the crowd-out effects are larger, at 11 percent and $2,600 for labor force participation and earnings. These estimates are an upper bound on the potential labor supply response of the wives of beneficiaries had their husbands not received benefits.