The Effect of Economic Conditions on the Disability Insurance Program: Evidence from the Great Recession

Nicole Maestas, Kathleen Mullen and Alexander Strand

No 25338, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine the effect of cyclical job displacement during the Great Recession on the Social Security Disability Insurance (SSDI) program. Exploiting variation in the severity and timing of the recession across states, we estimate the effect of unemployment on SSDI applications and awards. We find the Great Recession induced nearly one million SSDI applications that otherwise would not have been filed, of which 41.8 percent were awarded benefits, resulting in over 400,000 new beneficiaries who made up 8.9 percent of all SSDI entrants between 2008-2012. More than one-half of the recession-induced awards were made on appeal. The induced applicants had less severe impairments than the average applicant. Only 9 percent had the most severe, automatically-qualifying impairments, 33 percent had functional impairments and no transferable skills, and the rest were denied for having insufficiently severe impairments and/or transferable skills. Our estimates imply the Great Recession increased claims processing costs by $2.960 billion during 2008-2012, and SSDI benefit obligations by $55.730 billion in present value, or $97.365 billion including both SSDI and Medicare benefits.

JEL-codes: H51 H53 H55 J14 (search for similar items in EconPapers)
Date: 2018-12
New Economics Papers: this item is included in nep-ias, nep-lab and nep-pbe
Note: AG LS PE
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Citations: View citations in EconPapers (18)

Published as Nicole Maestas & Kathleen J. Mullen & Alexander Strand, 2021. "The effect of economic conditions on the disability insurance program: Evidence from the great recession," Journal of Public Economics, vol 199.

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Journal Article: The effect of economic conditions on the disability insurance program: Evidence from the great recession (2021)
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