RT Journal Article
SR Electronic
T1 How Do Unemployment Insurance Benefits Affect the Decision to Apply for Social Security Disability Insurance?
JF Journal of Human Resources
JO J Hum Resour
FD University of Wisconsin Press
SP 62
OP 94
DO 10.3368/jhr.51.1.62
VO 51
IS 1
A1 Stephan Lindner
YR 2016
UL http://jhr.uwpress.org/content/51/1/62.abstract
AB This paper examines whether Unemployment Insurance (UI) benefits affect the decision to apply for Social Security Disability Insurance (DI). Using data from the Survey of Income and Benefits matched to administrative records on DI applications, I find that higher UI benefits reduce applications for DI. This substitution effect is imprecisely estimated but economically significant, implying that a $1.00 increase in UI benefits reduces DI expenditures by 15 cents. Recognizing this cost-saving effect would increase the optimal UI benefit level by more than 20 percent for coefficients of relative risk aversion ranging from two to five.