Economic Conditions and SSI Applications
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Abstract
The Supplemental Security Income (SSI) program provides federally-funded income support for individuals with disabilities, and has become one of the most important means-tested transfer programs in the United States. Previous studies have examined the effects of economic conditions on growth in disability caseloads, but most focus on the Social Security Disability Insurance (SSDI) program. Most work on SSI dates from before welfare reform, which had both direct and indirect effects on the composition of the population at risk for SSI participation. In this paper we examine the relationship between SSI application risk and economic conditions between 1996 and 2010, using data from the Survey of Income and Program Participation (SIPP) linked to the Social Security Administration’s 831 file, which includes monthly data on SSI (and SSDI) application and receipt. Results from hazard models suggest that higher state unemployment rates have a large, positive effect on the risk of SSI application among jobless individuals, and our evidence suggests that female potential applicants may be more responsive to local economic conditions than men. State-level TANF policies have no effect on SSI application risk but state fiscal distress significantly increases application risk. Given the continued growth of the SSI program, understanding these relationships is increasingly important and policy-relevant.
Key Findings
· This study examines the relationship between economic conditions, state policy variables, and SSI applications between 1996 and 2010.
· Our results suggest the net benefits of federal aid during downturns may be underestimated.
· If federal interventions, such as the American Recovery and Reinvestment Act (ARRA) in 2009, result in reduced state unemployment rates, either by averting the laying off of state workers or by stimulating demand, or if they relieve state fiscal distress, the recession- induced increase in SSI and SSDI applications could be dampened.
· Future research should examine the extent to which federal aid such as ARRA or extended unemployment benefits impact application risk.
Citation
Nichols, Austin, Lucie Schmidt, and Purvi Sevak. 2014. "Economic Conditions and SSI Applications." University of Michigan Retirement Research Center (MRRC) Working Paper, WP 2014-318. Ann Arbor, MI. https://mrdrc.isr.umich.edu/publications/papers/pdf/wp318.pdf
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Paper ID
WP 2014-318Publication Type
Working Paper