Association for Public Policy Analysis & Management

I study the long-term effects of targeting government resources to children growing up in poverty who are even further disadvantaged by having a disability. It is ambiguous if such efforts would improve labor market outcomes by helping individuals treat their disabilities in youth or harm labor market outcomes by designating children as disabled which may reduce investment in human capital. In this paper, I estimate the labor market effects of gaining eligibility for Supplemental Security Income (SSI) disability benefits during childhood. In response to the Supreme Court decision Sullivan v. Zebley, the Social Security Administration (SSA) instituted new, less stringent disability criteria that disproportionately affected child applicants with mental disorders relative to those with non-mental disorders. The policy change also occurred earlier in some people's lives than others. Using confidential administrative data from SSA to implement an age cohort based difference-in-differences strategy, I show that for individuals with a mental disorder, each additional year of exposure to eased standards during childhood increases SSI receipt by 0.3 years. The additional benefit receipt reduces cumulative labor market earnings through age 30, more so for cohorts with a longer duration of exposure; cumulative earnings through age 30 are $1,600 lower for each additional year of exposure for those with mental disorders. Though I find that SSI receipt as a child reduces adult labor market earnings, this does not address the full range of outcomes that may be affected by receiving benefits.