Disability Insurance in the Great Recession: Ease of Access, Program Enrollment, and Local Hysteresis

40 Pages Posted: 3 May 2021 Last revised: 20 Jul 2021

See all articles by Melissa S. Kearney

Melissa S. Kearney

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Brendan M. Price

Board of Governors of the Federal Reserve System

Riley Wilson

Brigham Young University

Date Written: April 2021

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.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Suggested Citation

Kearney, Melissa S. and Price, Brendan M. and Wilson, Riley, Disability Insurance in the Great Recession: Ease of Access, Program Enrollment, and Local Hysteresis (April 2021). NBER Working Paper No. w28725, Available at SSRN: https://ssrn.com/abstract=3838490

Melissa S. Kearney (Contact Author)

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Brendan M. Price

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Riley Wilson

Brigham Young University ( email )

Provo, UT 84602
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1
Abstract Views
24
PlumX Metrics