Rejection from the Disability Insurance Program and Dependency on Social Support

Abstract

Abstract. Recent studies find that many workers do not return to the labor force after their applications for Disability Insurance (DI) are denied. It is, therefore, important to understand how this group funds their consumption. This paper uses the Survey of Income and Program Participation linked to administrative data to examine the social support participation behavior of rejected applicants. By following cohorts of individuals from 10 years before to 10 years after filing for DI, this paper shows that rejected DI applicants are at most 10 percent more likely to depend on social support programs than healthy workers. More general models show that at the time of application rejected applicants are 25 percent more likely to depend on social support programs than healthy workers. These effects decrease across time, but up to 10 years after filing, rejected DI applicants are still up to 12 percent more likely to depend on social support programs. These are the same levels of social support participation exhibited by DI beneficiaries. While rejecting more DI applicants may reduce DI outlays, these results suggest that rejected applicants are more likely to depend on other federally funded assistance programs to fund their (very) early retirement.JEL codes: J14, J18.

Consumption of psychotropic drugs among disability pension applicants with mental disorders: comparing awarded and rejected applicants in Finland

“…For the awarded applicants, in addition to the worsening of mental health leading to retirement, disability pension as an involuntary retirement is associated with emerged psychological symptoms [47][48][49]. A rejected pension may also create long-lasting stress [19,22], especially with additional financial challenges [15][16][17][18].…”

“…We aim to further understand the association between the disability pension process and the use of psychotropic drugs by including both awarded and rejected applicants. While the financial and labor market challenges for rejected disability pension applicants are clear [15][16][17][18], studies on mental health after the pension decision have been mostly qualitative [19,20]. In one of the rare quantitative studies, Ydreborg et al [21] found that after the pension decision, those who received a rejection had lower self-reported health, quality of life, and smaller social networks than awarded applicants.…”