NB19-04: DI Coverage, Application, and Receipt of Younger Workers: The Effect of Economic Conditions and Program Rules

We propose to use SSA administrative data to study the evolution of coverage, application, and receipt of DI benefits by younger workers over time, and how these trends have been affected by increasingly adverse economic conditions for young workers. We will also assess how DI eligibility rules interact with economic conditions in influencing these trends. To better understand how poor economic conditions may affect the DI program over the long run, we will also study longer-term effects on DI applications as these younger workers age and are increasingly affected by worsening health.
DI applicants and beneficiaries have grown younger. Younger applicants tend to be healthier and have higher employment potential. As economic conditions especially for low-wage younger workers have been declining, this has potentially important consequences for DI. Since adverse labor market conditions at young ages have been shown to affect workers’ health in middle age as well, their consequences could be long lasting. Yet what determines applications of younger workers, what the role of economic conditions might be, and how these effects are shaped by the DI eligibility rules is not well understood, partly due to lack of access to appropriate data. In exploiting administrative data at SSA to answer these questions, this analysis will improve our understanding of these patterns and their potential consequences for the DI program. Key steps include:
• Descriptive analysis of coverage, application, and receipt of DI of younger workers over time.
• Analysis of short- and long-term effect of economic conditions of young workers on these outcomes.
• Study of how these effects are mediated by the eligibility rules of the DI program.