The Health and Earnings of Rejected Disability Insurance Applicants
NBER Working Paper No. 2816 (Also Reprint No. r1260)
Applicants for Social Security Disability Benefits who fail to pass the medical screening form a natural 'control' group for beneficiaries. Data drawn from the 1972 and 1978 surveys of the disabled done for the Social Security Administration show that fewer than 50% of rejected male applicants work. Typical earnings of those that do are less than 50% of median earnings for other men their age. These data cast doubt on recent econometric work which suggests that the disincentive effects of DI have been substantial.
Published: The American Economic Review, Vol. 79, No. 3, pp. 482-503, (June 1989).