The Disability Option: Labor Market Dynamics with Macroeconomic and Health Risks

David Wiczer and Amanda Michaud

No 1459, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: In recent decades, Social Security Disability Insurance (SSDI) claims have risen rapidly. We evaluate the importance of changing macroeconomic conditions in shaping this trend. Our quantitative framework considers that economic conditions interact with individuals' health status in their decisions to apply for SSDI. Crucially, these factors are correlated through the nature of work: multiple sectors differentially expose workers to health and economic risks. Decomposing factors driving SSDI growth in a calibrated model, we find the deteriorating economic conditions and concentration of health risks account for about half of the increase in SSDI claims predicted by the model, about a third overall.

Date: 2017
New Economics Papers: this item is included in nep-dge, nep-hea and nep-ias
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Related works:
Working Paper: The Disability Option: Labor Market Dynamics with Macroeconomic and Health Risks (2018)
Working Paper: The Disability Option: Labor Market Dynamics with Macroeconomic and Health Risks (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed017:1459

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