The Impact of Past Incarceration on Later-Life DI and SSI Receipt

In the three decades from 1980 to 2010, there was a steady rise in the number of men receiving Social Security Disability Insurance (DI) benefits. The number of beneficiaries peaked in 2012 and has declined significantly since the end of the Great Recession, tracking very closely the (pre-pandemic) fall in the national unemployment rate and improvement in other labor-market fundamentals. Although general population aging and the business cycle have had clear effects on the number of recipients, one factor that has gone relatively understudied is the aging of the formerly incarcerated population. This paper examines the relationship between past incarceration and later-life DI and SSI receipt, as well as poverty status. To isolate causal effects independently from other factors, this analysis uses detailed micro-data from three nationally representative surveys—the Health and Retirement Study (HRS), National Longitudinal Survey of Youth 1979 Cohort (NLSY79) and the American Community Survey (ACS)—and a novel econometric identification strategy. The strategy relies on the timing of the entry of crack cocaine in the 1980s that differed across locations (states) to form an instrumental variable for the likelihood of incarceration.