The Effect of Economic Conditions on the Disability Insurance Program: Evidence from the Great Recession
We examine the effect of cyclical job displacement during the Great Recession on the Social Security Disability Insurance (SSDI) program. Exploiting variation in the severity and timing of the recession across states, we estimate the effect of unemployment on SSDI applications and awards. We find the Great Recession induced nearly one million SSDI applications that otherwise would not have been filed, of which 41.8 percent were awarded benefits, resulting in over 400,000 new beneficiaries who made up 8.9 percent of all SSDI entrants between 2008-2012. More than one-half of the recession-induced awards were made on appeal. The induced applicants had less severe impairments than the average applicant. Only 9 percent had the most severe, automatically-qualifying impairments, 33 percent had functional impairments and no transferable skills, and the rest were denied for having insufficiently severe impairments and/or transferable skills. Our estimates imply the Great Recession increased claims processing costs by $2.960 billion during 2008-2012, and SSDI benefit obligations by $55.730 billion in present value, or $97.365 billion including both SSDI and Medicare benefits.
This research was supported by 1) the U.S. Social Security Administration (SSA) through grant #1 DRC12000002-04 to the National Bureau of Economic Research (NBER) as part of the SSA Disability Research Consortium; and 2) the National Institutes of Health/National Institute on Aging (1R01AG056239). The findings and conclusions expressed are solely those of the author(s) and do not represent the views of SSA, NIH, any agency of the United States Government, or the NBER. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, expressed or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this research. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof. We thank Francoise Becker, Fred Galeas, George Green and Thuy Ho for sharing their expertise with the data; Ken Couch, Austin Nichols, and David Stapleton for helpful comments; and Linda Li for diligent research assistance.
Date: December 11, 2018
Author: Nicole Maestas, Harvard University and NBER
Paper: “The Effect of Economic Conditions on the Disability Insurance Program: Evidence from the Great Recession”
1. Sources of financial support for the research.
This research was supported by 1) the U.S. Social Security Administration (SSA) through grant #1 DRC12000002-04 to the National Bureau of Economic Research (NBER) as part of the SSA Disability Research Consortium; and 2) the National Institutes of Health/National Institute on Aging (1R01AG056239). The findings and conclusions expressed are solely those of the author(s) and do not represent the views of SSA, NIH, any agency of the United States Government, or the NBER.
2. Each interested party from whom he or she has received significant financial support, summing to at least $10,000 in the past three years, in the form of consultant fees, retainers, grants and the like.
I list below all parties from which I have received $10K+ in the last three years. I do not think that any of these entities is an “interested party” but I am erring on the side of completeness.
a. Alfred P. Sloan Foundation (research grants)
b. Social Security Administration (research grants)
c. National Institutes of Health/National Institute on Aging (research grants)
d. National Bureau of Economic Research (employment, honoraria)
e. University of St. Gallen, St. Gallen, Switzerland (teaching/visiting)
3. Each author should disclose any paid or unpaid positions as officer, director, or board member of relevant non-profit organizations or profit-making entities. A “relevant” organization is one whose policy positions, goals, or financial interests relate to the article.
a. Director, NBER Retirement and Disability Research Consortium (funded by the Social Security Administration)
4. The disclosures required above apply to any close relative or partner of any author.
No spousal or family-related potential COIs.
5. Each author must disclose if another party had the right to review the paper prior to its circulation.
The Social Security Administration had the right to review this paper prior to release for factual accuracy and confidentiality non-disclosure.Kathleen J. Mullen
I have received financial support summing to at least $10,000 in the past three years from the following organizations:
(1) U.S. Social Security Administration
(2) The Alfred P. Sloan Foundation
(3) The National Institute on AgingAlexander Strand
Alexander Strand is employed by the U.S. Social Security Administration (SSA).
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