Publications
Publications
- Journal of Public Economics
Asset Accumulation and Labor Force Participation of Disability Insurance Applicants
By: Pian Shu
Abstract
This paper provides empirical evidence of the existence of forward-looking asset-accumulation behavior among disability-insurance applicants, previously examined only in the theoretical literature. Using panel data from the RAND Health and Retirement Study, I show that rejected applicants for Social Security Disability Insurance (SSDI) possess significantly more assets than accepted applicants immediately prior to application and exhibit lower attachment to the labor force. These empirical results are consistent with the theoretical prediction in Diamond and Mirrlees (1978) and Golosov and Tsyvinski (2006) that certain individuals with high unwillingness to work maximize utility by planning in advance for their future disability insurance application. Because the existing empirical literature on disability insurance does not account for this intertemporal channel, it may underestimate the total work-disincentive effect of SSDI.
Keywords
Disability Insurance; Asset Accumulation; Labor Force Participation; Assets; Behavior; Employment; Insurance; Insurance Industry; United States
Citation
Shu, Pian. "Asset Accumulation and Labor Force Participation of Disability Insurance Applicants." Journal of Public Economics 129 (September 2015): 26–40.