We investigate the relationship between the unemployment rate and characteristics of applicants for Social Security Disability Insurance using administrative records of the universe of applicants between 1991 and 2008. As the unemployment rate rises, applications shift to those with higher work capacity who are rejected early in the eligibility determination process and have higher pre-application earnings and employment. However, post-application earnings and employment of denied applicants are slightly negatively related to the unemployment rate, suggesting that both compositional changes toward applications with higher work capacity and adverse economic conditions affect their employment and earnings.
- Social Security Disability Insurance
- business cycle
- disincentive effect
ASJC Scopus subject areas
- Economics and Econometrics
- Economics, Econometrics and Finance (miscellaneous)