IDEAS home Printed from https://ideas.repec.org/p/ran/wpaper/wr-1070.html
   My bibliography  Save this paper

Does Delay Cause Decay? The Effect of Administrative Decision Time on the Labor Force Participation and Earnings of Disability Applicants

Author

Listed:
  • David H. Autor
  • Nicole Maestas
  • Kathleen J. Mullen
  • Alexander Strand

Abstract

This paper measures the causal effect of time out of the labor force on subsequent employment of Social Security Disability Insurance (SSDI) applicants and distinguishes it from the discouragement effect of receiving disability benefits. Using a unique Social Security Administration workload database to identify exogenous variation in decision times induced by differences in processing speed among disability examiners to whom applicants are randomly assigned, we find that longer processing times reduce the employment and earnings of SSDI applicants for multiple years following application, with the effects concentrated among applicants awarded benefits during their initial application. A one standard deviation (2.1 month) increase in initial processing time reduces long-run "substantial gainful activity" rates by 0.36 percentage points (3.5%) and long-run annual earnings by $178 (5.1%). Because applicants initially denied benefits spend on average more than 15 additional months appealing their denials, previous estimates of the benefit receipt effect are confounded with the effect of delays on subsequent employment. Accounting separately for these channels, we find that the receipt effect is at least 50% larger than previously estimated. Combining the delay and benefits receipt channels reveals that the SSDI application process reduces subsequent employment of applicants on the margin of award by twice as much as prior literature suggests.

Suggested Citation

  • David H. Autor & Nicole Maestas & Kathleen J. Mullen & Alexander Strand, 2015. "Does Delay Cause Decay? The Effect of Administrative Decision Time on the Labor Force Participation and Earnings of Disability Applicants," Working Papers WR-1070, RAND Corporation.
  • Handle: RePEc:ran:wpaper:wr-1070
    as

    Download full text from publisher

    File URL: https://www.rand.org/content/dam/rand/pubs/working_papers/WR1000/WR1070/RAND_WR1070.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Chen, Susan & van der Klaauw, Wilbert, 2008. "The work disincentive effects of the disability insurance program in the 1990s," Journal of Econometrics, Elsevier, vol. 142(2), pages 757-784, February.
    2. Bound, John, 1989. "The Health and Earnings of Rejected Disability Insurance Applicants," American Economic Review, American Economic Association, vol. 79(3), pages 482-503, June.
    3. Lars Ljungqvist & Thomas J. Sargent, 1998. "The European Unemployment Dilemma," Journal of Political Economy, University of Chicago Press, vol. 106(3), pages 514-550, June.
    4. Blau, David M & Robins, Philip K, 1990. "Job Search Outcomes for the Employed and Unemployed," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 637-655, June.
    5. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    6. Eric French & Jae Song, 2014. "The Effect of Disability Insurance Receipt on Labor Supply," American Economic Journal: Economic Policy, American Economic Association, vol. 6(2), pages 291-337, May.
    7. Nicole Maestas & Kathleen J. Mullen & Alexander Strand, 2013. "Does Disability Insurance Receipt Discourage Work? Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt," American Economic Review, American Economic Association, vol. 103(5), pages 1797-1829, August.
    8. Parsons, Donald O, 1991. "The Health and Earnings of Rejected Disability Insurance Applicants: Comment," American Economic Review, American Economic Association, vol. 81(5), pages 1419-1426, December.
    9. repec:ran:wpaper:853 is not listed on IDEAS
    10. Bound, John, 1991. "The Health and Earnings of Rejected Disability Insurance Applicants: Reply," American Economic Review, American Economic Association, vol. 81(5), pages 1427-1434, December.
    11. Till von Wachter & Jae Song & Joyce Manchester, 2011. "Trends in Employment and Earnings of Allowed and Rejected Applicants to the Social Security Disability Insurance Program," American Economic Review, American Economic Association, vol. 101(7), pages 3308-3329, December.
    12. Robert R. Weathers II & Jeffrey Hemmeter, 2011. "The impact of changing financial work incentives on the earnings of Social Security Disability Insurance (SSDI) beneficiaries," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 30(4), pages 708-728, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Koning, Pierre & Muller, Paul & Prudon, Roger, 2022. "Do disability benefits hinder work resumption after recovery?," Journal of Health Economics, Elsevier, vol. 82(C).
    2. Deuchert, Eva & Eugster, Beatrix, 2019. "Income and substitution effects of a disability insurance reform," Journal of Public Economics, Elsevier, vol. 170(C), pages 1-14.
    3. Eric French & Jae Song, 2014. "The Effect of Disability Insurance Receipt on Labor Supply," American Economic Journal: Economic Policy, American Economic Association, vol. 6(2), pages 291-337, May.
    4. Andreas Ravndal Kostol & Magne Mogstad, 2014. "How Financial Incentives Induce Disability Insurance Recipients to Return to Work," American Economic Review, American Economic Association, vol. 104(2), pages 624-655, February.
    5. Nicole Maestas & Kathleen J. Mullen & Alexander Strand, 2013. "Does Disability Insurance Receipt Discourage Work? Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt," American Economic Review, American Economic Association, vol. 103(5), pages 1797-1829, August.
    6. Alexander Gelber & Timothy J. Moore & Alexander Strand, 2017. "The Effect of Disability Insurance Payments on Beneficiaries' Earnings," American Economic Journal: Economic Policy, American Economic Association, vol. 9(3), pages 229-261, August.
    7. Shu, Pian, 2015. "Asset accumulation and labor force participation of disability insurance applicants," Journal of Public Economics, Elsevier, vol. 129(C), pages 26-40.
    8. Koning Pierre & Vethaak Heike, 2021. "Decomposing Employment Trends of Disabled Workers," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 21(4), pages 1217-1255, October.
    9. Liebert, Helge, 2019. "Does external medical review reduce disability insurance inflow?," Journal of Health Economics, Elsevier, vol. 64(C), pages 108-128.
    10. Sylvain Chareyron & Naomie Mahmoudi, 2022. "The effects of disability benefits on the employment of low-skilled youth: Evidence from France," Erudite Working Paper 2022-09, Erudite.
    11. Slack, Sean & Ulph, David, 2014. "Optimal Universal and Categorical Benefits with Classification Errors and Imperfect Enforcement," SIRE Discussion Papers 2015-13, Scottish Institute for Research in Economics (SIRE).
    12. Barbara Broadway & Sonja C. Kassenboehmer, 2019. "Employment effects of job counseling for disability insurance recipients," Melbourne Institute Working Paper Series wp2019n18, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    13. Andreas Haller & Stefan Staubli & Josef Zweimüller, 2024. "Designing Disability Insurance Reforms: Tightening Eligibility Rules or Reducing Benefits?," Econometrica, Econometric Society, vol. 92(1), pages 79-110, January.
    14. Moore, Timothy J., 2015. "The employment effects of terminating disability benefits," Journal of Public Economics, Elsevier, vol. 124(C), pages 30-43.
    15. David H. Autor & Mark Duggan & Kyle Greenberg & David S. Lyle, 2016. "The Impact of Disability Benefits on Labor Supply: Evidence from the VA's Disability Compensation Program," American Economic Journal: Applied Economics, American Economic Association, vol. 8(3), pages 31-68, July.
    16. Hamish Low & Luigi Pistaferri, 2020. "Disability Insurance: Theoretical Trade‐Offs and Empirical Evidence," Fiscal Studies, John Wiley & Sons, vol. 41(1), pages 129-164, March.
    17. Andreas Ravndal Kostøl & Magne Mogstad, 2015. "Earnings, Disposable Income, and Consumption of Allowed and Rejected Disability Insurance Applicants," American Economic Review, American Economic Association, vol. 105(5), pages 137-141, May.
    18. Maria Cervini-Pla & Judit Vall Castelló, 2018. "The earnings and employment losses before entering the disability system," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(8), pages 1111-1128, November.
    19. Garcia-Mandicó, Sílvia & García-Gómez, Pilar & Gielen, Anne C. & O’Donnell, Owen, 2020. "Earnings responses to disability insurance stringency," Labour Economics, Elsevier, vol. 66(C).
    20. Eric French & Jae Song, 2012. "The effect of Disability Insurance receipt on labor supply: a dynamic analysis," Working Paper Series WP-2012-12, Federal Reserve Bank of Chicago.

    More about this item

    Keywords

    disability; labor force participation; transfer programs; social security;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ran:wpaper:wr-1070. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Benson Wong (email available below). General contact details of provider: https://edirc.repec.org/data/lpranus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.