Department of Economics
University of Chicago
1126 E 59th St.
Chicago, IL 60637
Institutional Affiliation: University of Chicago
NBER Working Papers and Publications
|March 2019||Disability and Distress: The Effect of Disability Programs on Financial Outcomes|
with Manasi Deshpande, Tal Gross: w25642
We provide the first evidence on the relationship between disability programs and markers of financial distress: bankruptcy, foreclosure, eviction, and home sale. Rates of these adverse financial events peak around the time of disability application and subsequently fall for both allowed and denied applicants. To estimate the causal effect of disability programs on these outcomes, we use variation induced by an age-based eligibility rule and find that disability allowance substantially reduces the likelihood of adverse financial events. Within three years of the decision, the likelihood of bankruptcy falls by 0.81 percentage point (30 percent), and the likelihood of foreclosure and home sale among homeowners falls by 1.7 percentage points (30 percent) and 2.5 percentage points (20 percent)...