How policy variables influence the timing of applications for Social Security Disability Insurance

This article analyzes the impact of policy variables--employer accommodations, state Social Security Disability Insurance (DI) allowance rates, and DI benefits--on the timing of an application for DI benefits by workers with a work-limiting health condition starting when their health condition first begins to bother them. The analysis uses a rich mixture of personal and employer characteristics from the Health and Retirement Study linked to Social Security administrative records. We find that most workers do not apply immediately for DI benefits when they are first bothered by a health condition. On the contrary, the median working-age man with a work-limiting condition waits 7 years after that time before applying, and the median working-age woman waits 8 years. Although the risk of applying for benefits is greatest in the year following onset, only 16 percent of men and 13 percent of women in our sample apply within the first year, and the risk of application falls thereafter. That finding suggests that institutional factors, in addition to health factors, may play a role in the timing of DI applications. Using kernel density estimates of the distribution of application and nonapplication ordered by state allowance rates (the rate of acceptance per DI determination in each state), we find that both men and women who live in states with high allowance rates are disproportionately more likely to apply for benefits in the first year after their condition begins to bother them than are those in states with low allowance rates. Using life-table analysis, we also find that men and women who are accommodated by their employers are significantly less likely to apply for DI benefits in each of the first few years after their condition begins to bother them than are those who are not accommodated. On the basis of this evidence, we include these policy variables in a model of the timing of DI application that controls for other socioeconomic variables as well as health. Using a hazard model, we find that workers who live in states with higher allowance rates apply for DI benefits significantly sooner than those living in states with lower allowance rates following the onset of a work-limiting health condition. Workers who are accommodated following the onset of a work-limiting health condition, however, are significantly slower to apply for DI benefits. Using the mean values of all explanatory variables, we estimate the relative importance of changes in these policy variables on the speed with which workers apply for benefits after onset. We find that the mean time until application for men is 10.22 years. Universal accommodations following onset would delay application by 4.36 years. In contrast, a 20 percent decrease in state allowance rates would delay application by only 0.88 years. For working-age women, the average expected time until application once a condition begins to bother them is 10.58 years. Universal accommodations would delay that by 3.76 years, and a 20 percent decrease in allowance rates would delay it by 1.47 years. A complication in this analysis is that the policy variables are to some degree endogenous. Accommodation is probably offered more often to workers who want to continue working. Allowance rates are chosen by states on the basis of federal policy and local choices and probably in part on the health condition of workers in the state. Therefore, our estimates are upper bounds of these policy effects. Still, we believe we provide evidence that the social environment faced by workers with work-limiting health conditions can significantly influence their decision to apply for DI benefits, holding their specific health conditions constant.

How older people in the United States and Germany fared in the growth years of the 1980s: a cross-sectional versus a longitudinal view

OBJECTIVES

The goal of the study was to show that cross-sectional and longitudinal data yield dramatically different answers to a basic question: "How did older persons fare in the recovery years of the 1980s?"

METHODS

The United States Panel Study of Income Dynamics and the German Socio-Economic Panel are used cross-sectionally to capture changes in the economic well-being of older persons in the trough and peak years of the 1980s business cycle, and longitudinally to trace how the economic well-being of a given cohort of older persons changed over those years. Kernel density estimation is then used to show how the distribution of economic well-being of these populations changed over these years.

RESULTS

Cross-sectional comparisons confirm that persons aged 65 and over in the peak year were better off than persons aged 65 and over in the trough year in both countries. Longitudinal comparisons, however, show that persons aged 65 and over in the trough year who survived to the peak year received a substantially smaller share of the rewards of economic recovery than cross-sectional comparisons imply. Moreover, the entire income distribution of older persons in the United States shifted downwards.

DISCUSSION

Compositional changes in the cross-sectional data, caused by the entry of high-income persons who are young in the peak year but old in the trough year, obscure the decline in the economic well-being of the cohort of older persons who survived the trough year, in cross-sectional comparisons of older populations in the United States in the 1980s.

Who takes early Social Security benefits? The economic and health characteristics of early beneficiaries

Using the 1992 and 1994 Waves of the Health and Retirement Survey, we compare individuals who first take Social Security benefits at age 62 with those who don't and find that the income and net assets of these two groups are similar in the years just prior to eligibility. However, there is great diversity within the groups, so that poor health appears to be more closely related to lower economic well-being than is early Social Security acceptance status. Our results suggest that raising the Social Security retirement age is not likely to dramatically lower the economic well-being of the typical person aged 62 since only 3% of men aged 62 are receiving Social Security retirement benefits, are in poor health, and have Social Security retirement benefits as their only source of pension income.

Sharing prosperity across the age distribution: a comparison of the United States and Germany in the 1980s

Using six waves of data from the Panel Study of Income Dynamics and the German Socio-Economic Panel we compare the relative economic well-being of Americans and Germans in the 1980s. Economic growth during the 1980s substantially improved the economic well-being of the average person in the both the United States and Germany. But the rewards were disproportionately distributed across age and gender. In both countries, the family incomes of the very old, the very young and women were lower and grew more slowly than did the income of other families. Social security policy in Germany was more successful than American policy in providing income security in old age. But, despite massive social security programs in both countries, older women were still the most vulnerable members of society, in part because of a substantial drop in the level of social insurance they received following the death of their spouse.

Public policy and the plans and preferences of older Americans

This study compares the retirement plans and preferences of a recent sample of 3,500 men and women of pre-retirement age-50 to 64. The data suggest that a minority of older workers expect to retire earlier than they really want to, and that many would delay retirement if they faced different terms and conditions of employment. Although most older Americans cannot or do not want to work, many do, and they represent a significant underutilized labor market resource.

Wife or Frau, women do worse: a comparison of men and women in the United States and Germany after marital dissolution

Longitudinal data from the Panel Study of Income Dynamics and the German Socio-Economic Panel show that in the Federal Republic of Germany, women experience even sharper drops in economic status immediately after a marital split than in the United States, while German and American men fare about the same. German social policy does little to reduce the disparities.

United States public policy and the elderly: the disproportionate risk to the well-being of women

"Cross-sectional comparisons show that poverty among the aged in the United States has dropped dramatically over the last two decades. We use longitudinal data to identify economic events associated with unfavorable economic outcomes and to trace the influence of these events on women and men at different ages. We find that while social insurance programs appear to prevent severe financial hardship from the most frequent work-related events, they are far less effective in cushioning the economic impact of widowhood and divorce, especially for women. We suggest a number of policy changes that would provide some measure of social insurance against adverse family-related events."

Substantial work disability and earnings losses in individuals less than age 65 with osteoarthritis: comparisons with rheumatoid arthritis

Substantial earnings losses and work disability were seen in individuals less than age 65 with asymmetric oligoarthritis, a surrogate for osteoarthritis, almost as great as those seen with symmetric polyarthritis, a surrogate for rheumatoid arthritis. The proportions of individuals who were working was 66.7% for men and 35.5% for women with asymmetric oligoarthritis, compared to 56.1% and 31.0% of those with symmetric polyarthritis, and 89.4 and 61.6% of those with no arthritis. Rates of work disability in individuals with asymmetric oligoarthritis involving one knee or one hip were in the same range as those in individuals with symmetric polyarthritis involving two knees or two hips. The earnings of women and men with asymmetric oligoarthritis were only 30 and 63% respectively of the earnings of persons with no arthritis. However, less than one-third of these earnings losses were explained by the presence of arthritis, with further explanation from higher age, lower formal education levels, and comorbidity in individuals with asymmetric oligoarthritis. These results suggest that greater attention to demographic and comorbidity variables may be indicated in efforts to control economic losses associated with arthritis.

The timing of falls into poverty after retirement and widowhood

A major concern of workers, even those financially prepared for retirement, is that a small risk of poverty may grow over time. Cross-sectional data showing that older cohorts have higher poverty rates substantiate this concern. Using data from the Retirement History Study, we analyze changes in the hazard of entering poverty as a cohort of elderly couples retire and age and the wives are widowed. The initial fall into poverty among those who were not poor before the husband retired is more closely linked to the event of retirement or widowhood than to the slowly eroding household income over the period of retirement and widowhood. The death of her retired husband puts a wife in economic jeopardy whether this shock occurs one year after his retirement or some years later.

The importance of age, education, and comorbidity in the substantial earnings losses of individuals with symmetric polyarthritis

A population-based survey designed to be representative of the entire US population of working age (18-64 years) includes data on pain and swelling of specific joints in each subject. We analyzed these data to estimate work status and disability status, as well as earnings losses, associated with Symmetric Polyarthritis. Subjects identified in the survey as having Symmetric Polyarthritis were similar in age, race, sex, and marital status to rheumatoid arthritis patients seen in clinical settings. Overall, 51% of women with Symmetric Polyarthritis and 47% of men with Symmetric Polyarthritis were severely disabled, compared with 4.5% of women and 3.7% of men with no arthritis. Earnings of women and men with Symmetric Polyarthritis were only 27% and 48%, respectively, of earnings of individuals without arthritis. The total earnings gap between the 2 groups was +17.6 billion (1986 dollars). Econometric regression analyses indicated that about one-third of this earnings gap was explained by the presence of Symmetric Polyarthritis. The remaining two-thirds was explained by differences in age, education, and comorbidity between individuals with Symmetric Polyarthritis and those without arthritis. The earnings of individuals with Symmetric Polyarthritis, therefore, would be expected to be considerably lower than those of the general population, even if these individuals were not affected by arthritis. Nonetheless, earnings losses of at least +6.5 billion annually are explained by Symmetric Polyarthritis.

Incidence, timing, and events associated with poverty: a dynamic view of poverty in retirement

Using longitudinal data from the Retirement History Study (RHS), we traced the economic well-being of couples who were not poor just prior to retirement through up to 10 years of retirement. The vast majority of these couples did not become poor during their first years of retirement. However, the risk and pattern of poverty during retirement varied greatly across groups identified by marital status and pension status. Married couples with pension income who survived over the period of our analysis rarely fell into poverty. Even surviving couples without pension income were not very likely to face poverty. Our findings indicate, however, that the death of a husband dramatically alters the risk and pattern of poverty in retirement.

Most chronic diseases are reported more frequently by individuals with fewer than 12 years of formal education in the age 18-64 United States population

Data from the 1978 Social Security Survey of Disability and Work indicate that most chronic diseases in the age 18-64 population are reported significantly more frequently by individuals with fewer than 12 years of formal education. Of the 23 health conditions reported by more than 1% of the population, 19 differed significantly in reported frequencies according to formal educational level. The relative frequencies of any reported condition in individuals with 1-8, 9-11, 12 years, and more than 12 years of formal education, were 3.6, 2.3, 1.4 and 1.0 respectively. Significant trends according to formal educational level were seen for all types of chronic diseases, including cardiovascular, gastrointestinal, musculoskeletal, neoplastic, psychiatric, pulmonary and renal diseases. These trends remained significant for all categories except neoplastic disease when formal education was controlled for age, sex, race and smoking, suggesting that formal educational level may identify a marker in the pathobiology of disease of importance comparable to these other demographic variables.

Effects of arthritis on wage earnings

Arthritis is the most frequently reported health condition in the working-age population, reported by nearly one quarter of the age 45 to 64 population in the 1978 Social Security Survey of disability and work. An economic model of earnings, which controls for differences in socioeconomic characteristics and other health conditions, indicates that arthritis is responsible for an annual loss of approximately $17 billion in wage earnings in the United States.