Do Stronger Employment Discrimination Protections Decrease Reliance on Social Security Disability Insurance? Evidence from the U.S. Social Security Reforms

Authors

Patrick Button, Tulane University, National Bureau of Economic Research, and IZAFollow
Mashfiqur R. Khan, Bates White Consulting

Publication Date

5-11-2020

Series

Upjohn Institute working paper ; 20-326

DOI

10.17848/wp20-326

Abstract

The United States Social Security Amendments of 1983 (SSA1983) increased the full retirement age (FRA) and increased penalties for retiring before the FRA. This cut to retirement benefits caused spillover effects on Social Security Disability Insurance (SSDI) applications and receipt by making SSDI relatively more generous. We explore if stronger disability and age discrimination laws moderated these spillovers, using variation whereby many state laws are broader or stronger than federal law. We estimate the effects of these laws on SSDI applications and receipt using a difference-in-differences approach, comparing cohorts affected by SSA1983 to similarly aged unaffected cohorts, across states. We find that a broader definition of disability, where only a medically diagnosed condition is required to be covered under state law, significantly reduces SSDI applications induced by SSA1983, but has no effect on SSDI receipt, likely because the foregone applications were for those with less severe conditions that were unlikely to have been approved for SSDI. We find some evidence that other broader or stronger features of state disability discrimination laws reduce both SSDI applications and receipt. We do not find much evidence that age discrimination laws reduce spillovers to SSDI. These results suggest that broader and stronger disability discrimination laws reduce employment barriers, allowing older individuals to work longer, possibly reducing reliance on SSDI and costly applications to SSDI.

Issue Date

May 2020

Sponsorship

We are thankful for generous grant support from the W.E. Upjohn Institute for Employment Research through their Early Career Research Award program, the Borchard Foundation Center on Law & Aging, the Social Security Administration and the Boston College Center for Retirement Research through the Steven H. Sandell Grant Program, and through the National Institutes of Health via a postdoctoral training grant to the RAND Corporation (5T32AG000244-23), which funded Patrick Button’s research from 2018–2019.

Subject Areas

LABOR MARKET ISSUES; UNEMPLOYMENT, DISABILITY, and INCOME SUPPORT PROGRAMS; Workers compensation and disability; Disability