Thursday, November 6, 2014
Santa Ana (Convention Center)
*Names in bold indicate Presenter
Social Security Disability Insurance (SSDI) has experienced high levels of entry for more than two decades, causing a rapid depletion of the DI Trust Fund. Social Security Administration actuaries predict it’s exhaustion by 2016. Despite current theories, the reasons for the expansion are unknown. The unintended consequences from public policies could be the cause of the problem. Changes to benefits or eligibility requirements can create strong incentives to enter the program at level greater than policy makers anticipate. I examine the impact of an increase in SSDI’s level of Substantial Gainful Activity—an earnings limit that determines program eligibility-- in 1999 for evidence of induced entry. Using the policy change as an instrumental variable within a Marginal Treatment Effects model, I find the SGA change caused induced entry but the estimates are so low as to be irrelevant for post-entitlement policy making.