WI23-05: The Effect of Public Policies on Work Disability: A Life Course Perspective

Our study estimates the impact of exposure to three welfare-enhancing policies—Medicaid, Food Stamps, and the Earned Income Tax Credit (EITC)—throughout the life course on individuals experiencing work disability in later life. Work disability is richly characterized by self-reports of duration and severity, with individuals who report both chronic and severe work limitations expected to be at the highest risk of applying for Disability Insurance (DI) benefits. Additionally, early Medicare receipt is used as a proxy for DI claims in investigations of whether social policy effects extend to DI awards. Using the Panel Study of Income Dynamics spanning over 50 years, we take a life-course approach that investigates policy effects from birth to pre-retirement. Our results show that exposure to EITC during adulthood can substantially reduce the probability of acquiring a work disability and having DI later in life. Although we find suggestive evidence that Medicaid and Food Stamps similarly decrease the likelihood of work disability, results are imprecisely estimated and inconsistent. These findings suggest that the EITC in particular could contribute to changing DI application and award trends.