How Policy Variables Influence the Timing of
Social Security Disability Insurance Applications









Richard V. Burkhauser 
Department of Policy Analysis and Management 
Cornell University

J.S. Butler
Department of Policy Analysis and Management
Cornell University

Robert R. Weathers II
Center for Policy Research
Syracuse University

August 1999
Brief November 2000


 .

      Social Security Disability Insurance (SSDI) is the largest federal transfer program 
targeted on workers with disabilities.  It dominates all other government programs aimed 
at this population.  It replaces the earnings of those workers who, due to a health 
condition, are no longer able to perform any substantial gainful activity.  Like all transfer 
programs triggered by lost earnings, SSDI may have the unintended consequence of 
discouraging work.
	United States public policy toward people with disabilities took a major turn in 
the 1990s with the passage of the Americans with Disabilities Act of 1990 (ADA).  It is 
the centerpiece of a new effort by government to keep people with disabilities in the 
workforce.  Title I of the ADA requires employers to make reasonable accommodations 
for workers with disabilities unless this would cause undue hardship to the operation of 
business.  One of the hopes underlying the ADA is that accommodation at the onset of a 
health condition will delay job exit and a subsequent move onto the disability rolls.  Yet, 
before the ADA was enacted and even now, little systematic evidence exists about the 
labor force experience of people with disabilities and how they and their employers 
respond when a health condition begins to affect work.
	These two policy thrusts—SSDI transfers to replace lost earnings and 
accommodation to increase duration on the job—can send mixed signals to workers who 
experience the onset of a disability.  While the onset of a health based work limitation 
will affect a worker’s ability to remain on the job, it does not necessarily result in a swift 
and certain job exit and transition onto the disability rolls.  The decision to leave the 
workforce and apply for SSDI benefits can be influenced both positively and negatively 
by policy variables.  Hence, understanding how such policies influence behavior for those 
who experience a disability is critical in developing policies that fully integrate people 
with disabilities into the workforce.  
	Using retrospective data from the Health and Retirement Study (HRS) together 
with matching state level data on SSDI allowance rates and individual level Social 
Security administrative record data on the generosity of SSDI benefits, we estimate the 
relative importance of policy variables—employer accommodation as well as the relative 
value and likelihood of acceptance onto the SSDI program—on the timing of SSDI 
application following the onset of a disability.  The results show that employer 
accommodation significantly slows a worker’s application for SSDI benefits while easier 
access to SSDI benefits and more generous SSDI benefits increase the speed of 
application following the onset of a health condition.      	
      Higher SSDI benefit levels increase the marginal value of the post-application 
period and will lead to quicker SSDI application.  A relatively high probability of 
acceptance is expected to increase the marginal value of the post-application period and 
speed the time to application.  We assume that the probability of a successful award by a 
worker is a function of the allowance rate for SSDI applicants in the worker’s state of 
residence.  Workers who live in states with relatively easy and porous screening 
processes have a higher probability of initial acceptance, and thus a higher marginal value 
in their post-application period which will induce them to apply sooner than other 
workers.  Because Social Security Administration guidelines for eligibility include 
medical as well as vocational criteria we also assume that those workers with health 
conditions that are more serious are more likely to be accepted, as are those whose 
vocational characteristics are weaker—poor education, older, manual laborers, etc.—and 
thus both are likely to apply more quickly.  
Data
      The Health and Retirement Study (HRS) is a longitudinal data set that tracks the 
behavior and economic well-being of a representative cohort of men and women born 
between 1931 and 1941 and their spouses through their retirement years.  Three waves of 
data are now available.  In 1992 (Wave 1), a total of 12,654 men and women from 7,607 
households were asked detailed questions regarding their labor force participation, health 
status, family structure, disability status, wealth holdings, and income.   These data were 
then match to restricted Social Security Administration records that contain a 
respondent’s social security earning records. 
	While the data set is large, even at these ages –51 to 61 in 1992—the onset of a 
disability is a relatively rare event.  Hence, even with three waves of data it is difficult to 
make full use of the longitudinal nature of the data by contemporaneously looking at 
work behavior following the onset of a disability. However, the HRS has a retrospective 
module that contains a series of questions focused on events following the onset of a 
current work limiting health condition.  We use these data here.    
	In the first wave of the HRS, 1,280 men and 1,338 women report having an 
impairment or health problem that both limited the kind or amount of paid work they 
could perform and that they expected to last for at least three months.   Of these, 848 men 
and 642 women said they were working for someone else (not self-employed) at the onset 
of this disability.  Of these respondents, we use 577 men and 422 women in our analysis.  
Most of the final round of respondents were excluded because they experienced the onset 
of their disability prior to 1974, the first year we have information on state allowance 
rates.
Conclusions
	The institutions workers face following the onset of a disability have a significant  
effect on the timing of their SSDI application. Using retrospective data from the HRS we 
show that Social Security policy variables—the state allowance rate and the size of one’s 
SSDI benefit—significantly influence the speed to SSDI application following the onset 
of a disability.  
      When we compare kernel density estimates of the distribution of those who apply 
for SSDI benefits soon after the onset of their disability across states ordered by the 
state’s allowance rate with the same distribution for those who do not apply for benefits, 
we find a difference between the two distributions with a greater mass of early applicants 
living in states with a high allowance rate.  Using a hazard model to control for both 
observed and unobserved heterogeneity we find that higher state allowance rates increase 
the hazard of SSDI application.  A 20 percent increase in state allowance rates at the 
mean value of all other variables would reduce male expected duration before application 
for SSDI benefits by 0.83 years, a decline from 10.45 to 9.62 years.  The decline for 
women is even higher—from 10.99 to 9.52 years. 
      In that same hazard model we also find that those with larger disability benefits 
also have a significantly greater risk of SSDI application.  A 20 percent increase in 
benefits would reduce expected duration for both men and women by over 2 years.  
      The Americans with Disabilities Act of 1990 was meant to increase the 
willingness of employers to provide accommodation to workers with disabilities.  Using a 
life table we show that workers who were accommodated following the onset of their 
disability had significantly lower risks of applying for SSDI benefits within the first three 
years of  onset.  When employer accommodations were included in our hazard model, we 
found they  significantly reduced the risk of application.  Universal employer 
accommodation would increase expected duration of men by 3.13 years.  For women, 
expected duration would increase by 2.62 years.
	Without question, the onset of a disability dramatically increases the risk of 
application for SSDI.  But our results suggest most workers do not immediately apply for 
SSDI benefits—the median male did not apply for SSDI benefits until the seventh year  
following the point at which his health condition began to bother him.  The median 
female did not apply until the eighth year following the onset of her disability.  This does 
not mean that health has no influence on work or application for benefits.  In fact, we find 
that even within our population with disabilities, the severity of one’s health condition 
and the type of health condition influence the speed to application. We find those with 
multiple conditions apply significantly sooner.  We also find that those with 
musculoskeletal conditions are significantly slower to apply than those with other 
conditions.  But we find that economic and demographic variables also significantly 
influence application speed.  Those workers with higher earnings and those who live in 
states with a lower unemployment rate, those with more years of education, as well as 
those who were younger at onset and who are non-black are all slower to apply for 
benefits.
	But most importantly from a public policy perspective, policy variable 
significantly influence the speed to application.  Our findings suggest that moving toward 
pro-work policies that, for instance, encourage greater employer accommodation 
following the onset of a disability or away from policies that make SSDI easier to obtain 
and more valuable to receive, would significantly slow the speed to SSDI application.





  We thank Robert Willis and his HRS staff at the Institute for Social Research, University of Michigan, as 
well as Jan Olson and the Social Security Administration, for allowing us to link restricted Social Security 
Administrative records and the restricted HRS state level identifiers to the HRS data at the ISR data 
enclave.  We also thank David Howell for his assistance in performing the estimations on the ISR data 
enclave computer. Funding for this research came from the National Institute for Aging, Program Project 
#1-PO1-AG09742-01, “The Well-Being of the Elderly in a Comparative Context” and from the United 
States Department of Education National Institute on Disability and Rehabilitation Research Grant Number 
H133B980038


Burkhauser, Butler, Weathers
Cornell University
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