Alexander Strand

Does Disability Insurance Receipt Discourage Work? Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt

We present the first estimates of the causal effects of Social Security Disability Insurance receipt on labor supply estimated using the entire population of program applicants. We exploit administrative data to match applications to disability examiners, and use natural variation in examiners’ allowance rates as an instrument for the allowance decision in a labor supply equation contrasting denied vs. allowed applicants. Importantly, we find that the disincentive effect is heterogeneous, ranging from a 10 percentage point reduction in labor force participation for those with more severe impairments to a 60 percentage point reduction for entrants with relatively less severe impairments.  Maestas: RAND Corporation, 1776 Main Street, Santa Monica, CA 90401 (e-mail: maestas@rand.org); Mullen: RAND Corporation, 1776 Main Street, Santa Monica, CA 90401 (e-mail: kmullen@rand.org); Strand: Social Security Administration, 500 E Street, 9 th Floor, Washington, DC 20254 (e-mail: Alexander.Strand@ssa.gov). We thank Josh Angrist, David Autor, John Bound, Raj Chetty, Eli Donkar, Kirk Doran, Joe Doyle, Eric French, Larry Katz, Lee Lockwood, Erin Johnson, Day Manoli, Heather Royer, David Stapleton, Till von Wachter, Heidi Williams, participants in the 2010 MRRC Researcher Workshop, the 2010 All-CA Labor Economics Conference at UC-Santa Barbara, and the 2011 American Economic Association meetings, and seminar participants at the Center for Business and Public Policy at the University of Illinois, Urbana-Champaign, RAND, and the MIT Economics Department for helpful comments and suggestions. This research was supported by a grant from the U.S. Social Security Administration (SSA) through the Michigan Retirement Research Center (MRRC). The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA or any agency of the Federal Government.

Does Delay Cause Decay? The Effect of Administrative Decision Time on the Labor Force Participation and Earnings of Disability Applicants

An influential body of research studies the labor supply and earnings of denied Social Security Disability Insurance (SSDI) applicants to estimate the potential employment and earnings of those awarded benefits. This research design implicitly treats employability as a stable applicant attribute that is not directly impacted by the process of applying for SSDI benefits. If, plausibly, applicants’ employment potential deteriorates while they are out of the labor force, then the labor force participation of denied applicants -- who spend an average of 10 months seeking benefits -- may understate their employment potential at the time of application. This paper tests whether the duration of SSDI applications causally affects applicants’ subsequent employment. We use a unique Social Security Administration workload database to identify exogenous variation in applicants’ initial decision times induced by differences in processing speed among the disability examiners to which they are randomly assigned. This variation significantly affects applicants’ total processing time but, importantly, is uncorrelated with their initial award and denial outcomes. We find that longer processing times reduce the employment and earnings of SSDI applicants in the years after their initial decision. A one standard deviation (2.4 month) increase in initial processing time reduces annual employment rates by 1 percentage point (3.2%) in years two, three and four post-decision. Extrapolating these effects to total applicant processing times, we estimate that the SSDI determination process directly reduces the post-application employment of denied applicants by approximately 3.6 percentage points (7%) and allowed applicants by approximately 5.2 percentage points (33%).

Disability Insurance and Healthcare Reform: Evidence from Massachusetts

As health insurance becomes available outside of the employment relationship as a result of the Affordable Care Act (ACA), the cost of applying for Social Security Disability Insurance (SSDI)—potentially going without health insurance coverage during a waiting period totaling 29 months from disability onset—will decline for many people with employer-sponsored health insurance. At the same time, the value of SSDI and Supplemental Security Income (SSI) participation will decline for individuals who otherwise lacked access to health insurance. We study the 2006 Massachusetts healthcare reform to estimate the potential effects of the ACA on SSDI and SSI applications.

The potential of the SSI program to reduce poverty among the elderly.

Abstract Is it more effective to reduce poverty among the elderly by increasing the benefits paid by the Supplemental Security Income (SSI) program or by increasing eligibility for the program? This paper answers that question from a policymakers perspective. At given program cost levels, we compare the potential reduction in poverty from increasing benefit levels to the potential reduction associated with a variety of policy proposals that would increase eligibility for the program. This paper employs a microsimulation model containing an eligibility and benefits calculator, a participation model, and an optimization algorithm. The data are from the Survey of Income and Program Participation supplemented by the administrative records of the SSI program. The results show that increasing eligibility by relaxing the restrictions of the means tests can be more effective in reducing poverty than raising benefit levels.

When Impairments Cause a Change in Occupation

This study examines workers who had physical or mental impairments that prevented continued work in their pre-onset occupation but did not qualify for Disability Insurance (DI) benefits. More specifically, we examine workers who experienced the onset of such impairments, applied for DI once, were denied benefits on the basis of residual ability to work in other occupations, and did not appeal the decision. In contrast to allowed claimants, this group of individuals continued to participate in the labor market at comparatively high rates. We describe their post-onset labor market experience, including employment rates and earnings losses by type of impairment.