Characteristics and Employment of Applicants for Social Security Disability Insurance over the Business Cycle
In this paper, we use administrative records of the universe of all people who apply for DI between 1991 and 2008 to examine how their composition changes during boom and busts. We find that almost all of the increase in the number of total applications and allowances during recessions is due to an increase in applications that are initially rejected at the second or fourth stage of initial determination. Because of appeals and re-applications, a sizable fraction of these additional applicants eventually manage to get into the program. The share of applicants and beneficiaries who jointly apply for Supplemental Security Income (SSI) also increases with the unemployment rate. Because SSI is a means-tested program, this finding implies that a greater share of applicants have low incomes and assets at the time of application.
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