Association for Public Policy Analysis & Management

This paper analyzes the effect of the minimum wage on the probability of receiving Social Security Disability (SSDI) payments. It exploits changes in the minimum wage, both in timing and intensity, between 2008-2017, as well as in the regional price level to estimate the relationship. The findings are indicative that higher minimum wage might induce to higher probabilities of being on SSDI. These results are suggestive evidence of a mechanism where the minimum wage leads to higher probabilities of displacement and/or lower job vaccines flows, which in turn increase the number of SSDI beneficiaries. This effect is particularly significant for less-educated individuals and disabilities associated with physical mobility and independence as well as cognitive difficulties. By contrast, individuals with disabilities associated with vision and hearing difficulties do not appear to be affected by changes in the minimum wage. This study also finds some evidence without being statistically significant that increases in the minimum wage might deter some supply of labor from SSDI recipients that already worked, especially for low levels of education.