Disability Benefit Take-Up and Local Labor Market Conditions

Exploiting county-level variation in oil-producing areas from shocks to world oil and gas prices, we study how local labor market conditions affect disability take-up. We extend well-known previous work using a similar research design by analyzing a different price shock; a larger, more representative set of labor markets; and a more recent period marked by skyrocketing disability payments. Our estimated elasticity for SSDI payments with respect to earnings of -0.29 is surprisingly similar to earlier findings. Our preferred SSI elasticity estimate of -0.16 is smaller than previous findings, but we show that SSI programmatic changes explain most of the difference.