Behavioral Responses to Changes in Federal Disability Policy: The Role of Measured Disability on Inferences

Brent Kreider ()

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: Using both direct and indirect information about work limitation, this paper constructs and estimates a simultaneous model of "true" work disability, applications for federal disability benefits, and awards. Potential overreporting of work limitation by applicants is treated as a censored-sample problem. Empirical findings suggest that the estimated sensitivity of applications to changes in benefit levels is downward biased when using a typical "uncorrected" measure of work limitation in the estimation. The estimated sensitivity of applications to changes in award standards is also found to be downward biased when using this measure, and in this case its use introduces more bias into the policy inferences than omitting a disability measure from the analysis altogether. Younger, unmarried, less educated, male, and black applicants are found most likely to exaggerate work limitation.

Date: 2000-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:5396

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