The work disincentive effects of the disability insurance program in the 1990s

Abstract

In this paper we evaluate the work disincentive effects of the disability insurance (DI) program during the 1990s using comparison group and regression-discontinuity methods. The latter approach exploits a particular feature of the DI eligibility determination process to estimate the program's impact on labor supply for an important subset of DI applicants. Using merged survey-administrative data, we find that during the 1990s the labor force participation rate of DI beneficiaries would have been at most 20 percentage points higher had none received benefits. In addition, we find even smaller labor supply responses for the subset of ‘marginal’ applicants whose disability determination is based on vocational factors.