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The Effect of the Disability Insurance Application Decision on the Employment of Denied Applicants

Author

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  • Mashfiqur R. Khan

Abstract

Social Security Disability Insurance (SSDI) affects the labor supply of applicants through its work discouragement and through human capital deterioration regardless of the ultimate acceptance or denial of the claim. In this paper, I provide an estimate of the causal effect of SSDI application on denied applicants using non-applicants as a comparison group. Exploiting instrumental variable approach, I find that the SSDI causes a 36 percentage point reduction in employment of the denied applicants of ages 50 to 58 in the short run. The loss of potential employment of the denied SSDI applicants is a welfare loss to the society.

Suggested Citation

  • Mashfiqur R. Khan, 2018. "The Effect of the Disability Insurance Application Decision on the Employment of Denied Applicants," AEA Papers and Proceedings, American Economic Association, vol. 108, pages 267-271, May.
    • Handle: RePEc:aea:apandp:v:108:y:2018:p:267-71
    Note: DOI: 10.1257/pandp.20181046
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    File URL: https://www.aeaweb.org/doi/10.1257/pandp.20181046
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    Citations

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    Cited by:

    1. Button, Patrick & Khan, Mashfiqur R. & Penn, Mary, 2022. "Do stronger employment discrimination protections decrease reliance on Social Security Disability Insurance? Evidence from the U.S. Social Security reforms," The Journal of the Economics of Ageing, Elsevier, vol. 22(C).

    More about this item

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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