Association for Public Policy Analysis & Management

Abstract: In this paper, we use longitudinal administrative data on workers and their employers to analyze the effect of job displacement on the incidence of claiming Social Security Disability Insurance (SSDI) benefits. We exploit information on the reason for job loss coming from the employer side, as well as actual information on benefit claiming from administrative data, and hence are better able to analyze economic shocks affecting SSDI applications and receipts of workers previously in steady employment. We find that a job displacement triggers a temporary rise in both SSDI applications and receipt that lasts four to five years. We show this effect appears to fluctuate over time with the institutional and economic environment. The findings are useful for better understanding how economic fluctuations can affect the SSDI program.