WI22-01: The Effect of Public Policies on Work Disability



This study estimates the impact of childhood exposure to three welfare-enhancing policies – Medicaid, Food Stamps, and the Earned Income Tax Credit (EITC) – on work disability in adulthood. Work disability is characterized by duration and severity, with more chronic and severe conditions identifying individuals at a higher risk of applying to and claiming Disability Insurance (DI).

Individual contexts and environments can lead to different benefit claiming patterns. This study circumvents the selection issue by examining childhood exposure to policies as they rolled out. States implemented Medicaid programs from 1966 – 1970 with varying population coverage whereas Food Stamps were introduced at the county level from 1961 – 1975. The federal EITC program launched in 1975 with a small benefit for households with children and its generosity has increased significantly over time. Nearly 30 states have implemented their own supplemental EITC benefits.

Leveraging this extensive variation, individual and joint impacts of childhood exposure to the three policies on later-life work disability are evaluated using the Panel Study of Income Dynamics. In addition to self-reported work disability, early Medicare receipt prior to age 65 is used to examine whether impacts extend to DI claims. Work disability exists at the intersection of health, resources, and labor market experiences. Each of these elements exhibits variation by sex and race/ethnicity, underpinning the need to conduct analyses by demographic subpopulations. Results aim to inform the Social Security Administration and other policymakers on optimal avenues to reduce the pool of work disability claimants and how policy impacts differ across subpopulations.

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