NBER Disability Research Center

NB13-10, Assessing the Interaction of Unemployment Insurance and Social Security Disability Insurance

Andreas Mueller, Columbia University
Till von Wachter, UCLA and NBER

Although an increasing body of literature has examined the effect of local economic conditions in explaining high and rising Social Security Disability Insurance (SSDI) rolls, little is known about the effect of unemployment insurance benefits on SSDI rolls. Yet, unemployment insurance (UI) is the primary program available to stable workers who become unemployed due to economic circumstances, and could significantly alter how local economic conditions affect applications to SSDI and awards. In this project, we use administrative data from several sources to provide estimates of the effect of extensions in the duration of UI benefits on the incidence, composition, and success of applications to SSDI. The results will help to assess whether UI extensions in recessions can affect the number of applications and the financial burden to SSDI. They also provide direct evidence on the extent to which economic conditions lead workers to apply to SSDI, when given additional support they would return to the labor force. A key advantage of the data we propose to use is that it contains high-frequency data on UI receipt, earnings, and SSDI program information. Hence, it enables us to draw a more detailed picture of earnings, employment, and unemployment dynamics around SSDI applications than would otherwise be possible.