Working Paper: NBER ID: w28725
Authors: Melissa S. Kearney; Brendan M. Price; Riley Wilson
Abstract: Previous research has documented that Social Security Disability Insurance (SSDI) applications and awards increase during economic downturns and that expanded access to SSDI leads to a reduction in employment. We build on these insights and investigate to what extent differential access to SSDI during economic downturns leads to differential changes in SSDI enrollment and employment during the subsequent recovery. We exploit plausibly exogenous variation in SSDI appeals processing time (a measure of hassle or access) facing individuals living in ZIP codes that straddle Social Security Administration hearing office catchment borders. During the Great Recession, ZIP codes assigned to hearing offices with faster appellate processes saw a larger increase in SSDI enrollment than their cross-border neighbors. These enrollment effects are concentrated among ZIP code pairs that experienced more severe labor market downturns, and they persist as late as 2015. In the full sample, there is no clear effect of longer processing times on subsequent employment rates. However, we find some limited evidence that faster appellate processes may have weighed on the employment recovery in hard-hit ZIP codes that had high pre-recession rates of SSDI enrollment. Our findings highlight the importance of considering interaction effects between economic shocks and ease of access to the safety net.
Keywords: No keywords provided
JEL Codes: H53; I38; J08
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| easier access to SSDI (I38) | increased SSDI enrollment (H55) |
| faster appellate processes (K41) | larger increase in SSDI enrollment (H55) |
| additional month of processing time (C41) | reduction in SSDI enrollment rates (H55) |
| longer processing times (C41) | lower SSDI enrollment rates (H55) |
| processing delays (C41) | deter some applicants (J79) |
| longer processing times (C41) | scarring effects that limit employment potential (J68) |
| interaction between economic shocks and SSDI access (J65) | effects on employment recovery (J68) |