Working Paper: NBER ID: w29988
Authors: Colleen Carey; Nolan H. Miller; David Molitor
Abstract: Social Security Disability Insurance (DI) awards rise in recessions, especially for older adults. Using Medicare data, we investigate whether this pattern is driven by changes in health or the cost of entering DI. Higher unemployment at application corresponds to increased DI entry, lower medical spending, and lower mortality among new entrants. Leveraging age-based discontinuities in disability eligibility criteria at older ages, we find that workers induced into DI by poor economic conditions have similar spending and mortality outcomes to those induced by relaxed eligibility criteria, suggesting that changes in entry costs can fully account for cyclical DI entry.
Keywords: disability insurance; recessions; Medicare; health shocks; entry costs
JEL Codes: H51; J14; J68
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic downturns (F44) | increase in disability insurance (DI) enrollment (H53) |
| higher unemployment (J64) | increased DI entry (Y10) |
| higher unemployment (J64) | lower medical spending among DI entrants (H51) |
| higher unemployment (J64) | lower mortality among new entrants (L26) |
| reduced entry costs during recessions (D43) | increased DI enrollment (I19) |
| DI entrants above age thresholds (J14) | lower medical spending than those below (H51) |
| DI entrants at high unemployment (J68) | spending does not exceed those at mean unemployment (H53) |