How policy variables influence the timing of applications for Social Security Disability Insurance
Burkhauser, Richard V.; Butler, J. S.; Weathers II, Robert R.
This article analyzes the impact of policy variables - employer accommodations, state Social Security Disability Insurance (DI) allowance rates, and DI benefits - on the timing of an application for DI benefits by workers with a work-limiting health condition starting when their health condition first begins to bother them. The analysis uses data from the Health and Retirement Study linked to Social Security administrative records. We find that most workers do not apply immediately for DI benefits when they are first bothered by a health condition. The median working-age man (woman) with a work-limiting condition waits 7 (8) years after that time before applying. Using kernel density estimates of the distribution of application and non-application ordered by state allowance rates (the rate of acceptance per DI determination in each state), we find that both men and women who live in states with high allowance rates are disproportionately more likely to apply for benefits in the first year after their condition begins to bother them than are those in states with low allowance rates. Using a hazard model, we find that workers who live in states with higher allowance rates apply for DI benefits significantly sooner than those living in states with lower allowance rates following the onset of a work-limiting health condition. Workers who are accommodated following the onset of a work-limiting health condition, however, are significantly slower to apply for DI benefits.
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