Association for Public Policy Analysis & Management

Panel: SSDI Application and Labor Supply Decisions of Disabled Workers

(Poverty and Income Policy)

The outcome of the disability application process can have long-term fiscal and individual consequences: total expenditures on Social Security Disability Insurance (SSDI) benefits amount to approximately $140 billion per year, while almost half of SSDI beneficiaries in the 1996 award cohort were still receiving benefits ten years after initial benefit receipt (Liu and Stapleton, 2011). Additionally, return to work was among the rarest of reasons for termination of benefits: only 4% of beneficiaries in this cohort earned at a level that led to exit from SSDI, highlighting the need to better understand the relationship between work and disability. This panel provides a deeper understanding of the labor supply and SSDI application decisions of disabled individuals, from the employment environment before any SSDI application, to the application decision itself, and milestones achieved once receiving benefits. Through a better understanding of these interactions, policymakers can more effectively target benefits and employment incentives to the disabled. First of all, access to employment opportunities can be an important determinant of whether or not disabled individuals are working, particularly if the disabled face discrimination in the labor market. The first paper brings new evidence to bear on how changes in disability discrimination laws affect the employment of the diverse disabled population before any SSDI application. Secondly, given that the application process for SSDI can be long and confusing, changes in the application process itself could significantly affect the decision to apply. The second paper on this panel analyzes how a change in the online disability application process affected application and participation in SSDI. Finally, a better understanding of individual behavior while receiving disability benefits can reveal the factors that affect employment or exit from SSDI. The last paper uses administrative data from the Social Security Administration to study the most common pathways followed by a recent cohort of SSDI and SSI awardees in the ten years following initial benefit receipt.