Inter-state variation in disability applications during the COVID-19 pandemic
We study inter-state differences in the monthly dynamics of disability applications during the Covid-19 pandemic. We use forecasting models to create counterfactual scenarios of disability applications, and then test whether state-level forecasting errors are associated with Covid-19 cases and state-level, pandemic-related policies. Data come from the SSA State Agency Monthly Workload Data from October 2000 to April 2022. We contribute to existing literature in several ways. First, we address seasonal adjustment of the data during the pandemic and consider seasonal echoes and their potential consequences in our analysis. Second, our model incorporates spatial correlations across states. Third, we include a broad range of policy-related factors which may influence the effect of the pandemic on applications.
Our findings show a large, overall drop in disability applications during the Covid-19 pandemic. Based on seasonally adjusted data, we find that total applications were 84 percent of their 2017-2019 level in May 2020, and total applications were still 89 percent of their 2017-2019 level as of April 2022. The drop in disability applications is driven by falling SSI applications, which were still 77 percent of their 2017-2019 level as of April 2022.
Our analysis of state-level out-of-sample forecasting errors shows that during the pandemic, there has been considerable heterogeneity across states in the timing and magnitude of the pandemic’s impact on disability applications. Forecasting errors generally are larger in magnitude for SSI and Concurrent applications relative to those of SSDI applications during the pandemic. We find that state unemployment rate, state of emergency declarations, and school closures are correlated with forecast errors for all types of applications. For SSI applications, ACA Medicaid expansion status is correlated with state-level forecast errors. These state-level factors appear to play a role in explaining intra-state variation in the effect of the pandemic on disability applications.
The research reported herein was performed pursuant to grant RDR18000003 from the US Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium. The opinions and conclusions expressed are solely those of the author(s) and do not represent the opinions or policy of SSA, any agency of the Federal Government, or NBER. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report. 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.