Assessing Systematic Differences in Industry-Award Rates of Social Security Disability Insurance

Till von Wachter

NBER Retirement Research Center Paper No. NB 12-13
Issued in September 2012, Revised in November 2013

Although a large body of literature has examined the role of worker incentives and characteristics for explaining high and rising Social Security Disability Insurance (SSDI) rolls,  little is known about the role of firms and industries. Yet, firms face potentially important  incentives  to  exploit  social  insurance  systems,  as  explicitly  recognized  in  the  design  of  Unemployment Insurance, and may have substantially different work environments. In this  project,  we  characterize  differences  in  SSDI  award  rates  by  industry  using  the March Current Population Survey (CPS). The CPS allows us to construct multiple measures of SSDI  receipt,  use  a  longitudinal  match  to  construct  new  SSDI  awards,  and  to  adjust  industry‐ specific  SSDI  award  rates  for  differences  in  worker  characteristics,  such  as  educational  background,  family  status  and  occupation.  Our  findings  indicate  substantial  differences  in  the  average  rates  of  new  SSDI  awards  across  industries  that  are  robust  to  important  differences in worker composition.

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This paper was revised on November 15, 2013