Disability Insurance Benefits and Labor Supply
Disability Insurance Benefits and Labor Supply

Author: Jonathan Gruber

Publisher:

Published: 1996

Total Pages: 56

ISBN-13:

DOWNLOAD EBOOK

Disability Insurance (DI) is a public program that provides income support to persons unable to continue work due to disability. The difficulty of defining disability, however, has raised the possibility that this program may be subsidizing the early retirement of workers who are not truly disabled. A critical input for assessing the optimal size of the DI program is therefore the elasticity of labor force participation with respect to benefits generosity. Unfortunately, this parameter has been difficult to estimate in the context of the U.S. DI program, since all workers face an identical benefits schedule. I surmount this problem by studying the experience of Canada, which operates two distinct DI programs, for Quebec and the rest of Canada. The latter program raised its benefits by 36% in January, 1987, while benefits were constant in Quebec, providing exogenous variation in benefits generosity across similar workers. I study this relative benefits increase using both simple `difference-in-difference' estimators and more parameterized estimators that exploit the differential impact of this policy change across workers. I find that there was a sizeable labor supply response to the policy change; my central estimates imply an elasticity of labor force non-participation with respect to DI benefits of 0.25 to 0.32. Despite this large labor supply response, simulations suggest that there were welfare gains from this policy change under plausible assumptions about preference parameters.

Labor Supply Under Disability Insurance
Labor Supply Under Disability Insurance

Author: Frederic P. Slade

Publisher:

Published: 2007

Total Pages: 24

ISBN-13:

DOWNLOAD EBOOK

There has been a significant recent growth in the Social Security Administration's Disability Insurance (DI) program, both in the number of covered workers under the program and in the amount of monthly benefits, One possible factor causing this growth has been labor supply disincentives under the pro- gram. The labor supply decision by an individual involves the effect of the disability benefit structure (potential benefits) on labor force participation. Probit estimates from the 1969 original sample of the Longitudinal Retirement History Study (LRHS) indicated an elasticity of participation with respect to benefits of -0031 for married men aged 58-63, and -.023 for all men of the same age group. The magnitude of these estimates are much less than those found by authors such as Parsons, and suggest relatively insignificant efficiency losses in terns of reduced work effort.

Disability Benefits, Consumption Insurance, and Household Labor Supply
Disability Benefits, Consumption Insurance, and Household Labor Supply

Author: David H. Autor

Publisher:

Published: 2017

Total Pages: 42

ISBN-13:

DOWNLOAD EBOOK

While a mature literature finds that Disability Insurance (DI) receipt discourages work, the welfare implications of these findings depend on two rarely studied economic quantities: the full cost of DI allowances to taxpayers, summing over DI transfer payments, benefit substitution to or from other transfer programs, and induced changes in tax receipts; and the value that individuals and families place on receiving benefits in the event of disability. We comprehensively assess these missing margins in the context of Norway's DI system, drawing on two strengths of the Norwegian environment. First, Norwegian register data allow us to characterize the household impacts and fiscal costs of disability receipt by linking employment, taxation, benefits receipt, and assets at the person and household level. Second, random assignment of DI applicants to Norwegian judges who differ systematically in their leniency allows us to recover the causal effects of DI allowance on individuals at the margin of program entry. Accounting for the total effect of DI allowances on both household labor supply and net payments across all public transfer programs substantially alters our picture of the consumption benefits and fiscal costs of disability receipt. While DI allowance causes a significant increase in household income and consumption on average, it has little impact on income or consumption of married applicants because spousal earnings responses (via the added worker effect) and benefit substitution entirely offset DI benefit payments among those who are allowed relative to those who are denied. To develop the welfare implications of these findings, we estimate a dynamic model of household behavior that translates employment, reapplication and savings decisions into revealed preferences for leisure and consumption. We find that household valuation of receipt of DI benefits is considerably greater for single and unmarried individuals than for married couples because spousal labor supply substantially buffers household income and consumption in the event of DI denial.

Social Security Disability Law and the American Labor Market
Social Security Disability Law and the American Labor Market

Author: Jon C. Dubin

Publisher: NYU Press

Published: 2021-09-21

Total Pages: 276

ISBN-13: 1479811025

DOWNLOAD EBOOK

How social security disability law is out of touch with the contemporary American labor market Passing down nearly a million decisions each year, more judges handle disability cases for the Social Security Administration than federal civil and criminal cases combined. In Social Security Disability Law and the American Labor Market, Jon C. Dubin challenges the contemporary policies for determining disability benefits and work assessment. He posits the fundamental questions: where are the jobs for persons with significant medical and vocational challenges? And how does the administration misfire in its standards and processes for answering that question? Deploying his profound understanding of the Social Security Administration and Disability law and policy, he demystifies the system, showing us its complex inner mechanisms and flaws, its history and evolution, and how changes in the labor market have rendered some agency processes obsolete. Dubin lays out how those who advocate eviscerating program coverage and needed life support benefits in the guise of modernizing these procedures would reduce the capacity for the Social Security Administration to function properly and serve its intended beneficiaries, and argues that the disability system should instead be “mended, not ended.” Dubin argues that while it may seem counterintuitive, the transformation from an industrial economy to a twenty-first-century service economy in the information age, with increased automation, and resulting diminished demand for arduous physical labor, has not meaningfully reduced the relevance of, or need for, the disability benefits programs. Indeed, they have created new and different obstacles to work adjustments based on the need for other skills and capacities in the new economy—especially for the significant portion of persons with cognitive, psychiatric, neuro-psychological, or other mental impairments. Therefore, while the disability program is in dire need of empirically supported updating and measures to remedy identified deficiencies, obsolescence, inconsistencies in application, and racial, economic and other inequities, the program’s framework is sufficiently broad and enduring to remain relevant and faithful to the Act’s congressional beneficent purposes and aspirations.

Disability
Disability

Author: Virginia P. Reno

Publisher: Jessica Kingsley Publishers

Published: 1997

Total Pages: 220

ISBN-13: 9780815774051

DOWNLOAD EBOOK

This book presents a cross-cutting assessment of disability income policy in public and private programs in the United States and in European countries. It evaluates whether there is a crisis in disability benefit policy, drawing on an in-depth review of Social Security disability programs by a panel of national experts.

Disability, Work, and Cash Benefits
Disability, Work, and Cash Benefits

Author: Jerry L. Mashaw

Publisher: W. E. Upjohn Institute

Published: 1996

Total Pages: 448

ISBN-13:

DOWNLOAD EBOOK

Reviews the US Social Security disability programme, with a view to determining whether rehabilitation and work could be incorporated in the income programme without greatly expanding costs or weakening the right to benefit for disabled persons.

The Labor Market Effects of Disability Benefits Loss
The Labor Market Effects of Disability Benefits Loss

Author: Anikó Bíró

Publisher:

Published: 2023

Total Pages: 0

ISBN-13:

DOWNLOAD EBOOK

Disability benefits provide social insurance against the risk of losing working capacity, as well as an important source of income for individuals with disabilities. They are also costly and tend to reduce labor supply. Although spending can be contained by careful targeting, correcting past flaws in eligibility rules or assessment procedures may entail welfare costs. This paper studies a major reform in Hungary that reassessed the health and working capacity of a large share of beneficiaries. Leveraging age and health cutoffs in the reassessment, the paper estimates employment responses to loss or reduction of benefits. The findings show that among those who left disability insurance due to the reform, 58 percent were employed in the primary labor market, 6 percent participated in public works, and 36 percent were out of work without benefits in the post-reform period. The consequences of leaving disability insurance differed sharply by pre-reform employment status. Among the beneficiaries who were employed in the pre-reform year, 81 percent worked, while only 33 percent of those without pre-reform employment did. The gains of the reform in activating beneficiaries were small and strongly driven by pre-reform employment status. This points to the importance of combining financial incentives with broader labor market programs that increase employability.