What Are the Real Application Costs of SSDI? The Effect of Waiting Time on Labor Force Participation and Earnings

Published: 2011
Project ID: UM11-01


A well-known body of research explores how the award of Social Security Disability Insurance (SSDI) benefits affects the labor supply and earnings of recipients. Our proposed project will explore a complementary — and we believe equally consequential — set of questions: how does denial of SSDI benefits affect the labor supply and earnings of denied applicants? And, closely related, how do delays in SSDI awards affect subsequent employment of SSDI beneficiaries? Our approach exploits natural variation in average processing time by disability examiners as an instrument for applicant waiting time. Using a unique administrative workload database, we will evaluate how time spent out of the labor market during the application and appeals process affects subsequent employment opportunities and earnings of both rejected and accepted applicants.