The effect of economic conditions on the disability insurance program: Evidence from the great recession

Nicole Maestas, Kathleen Mullen and Alexander Strand

Journal of Public Economics, 2021, vol. 199, issue C

Abstract: We examine the effect of 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% were awarded benefits, resulting in over 400,000 new beneficiaries who made up 8.9% of all SSDI entrants between 2008 and 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% had the most severe, automatically-qualifying impairments, 33% 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.

Keywords: Disability insurance; Unemployment; Great Recession (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Working Paper: The Effect of Economic Conditions on the Disability Insurance Program: Evidence from the Great Recession (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:199:y:2021:i:c:s0047272721000463

DOI: 10.1016/j.jpubeco.2021.104410

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