The Labor Market Consequences of Receiving Disability Benefits During Childhood

Publisher: The Journal of Human Resources (online ahead of print)
Sep 16, 2019
Authors
Michael Levere

Key Findings:

  • The Zebley decision made it easier for children with mental disabilities to qualify for SSI benefits.
  • Children with mental disabilities who were younger when the decision occurred received benefits for a longer period of time in childhood.
  • These children have lower earnings as adults, with cumulative earnings between ages 18 and 30 as much as $30,000 lower for children who were 10 when the decision occurred.
  • Some of this impact may be driven by higher SSI receipt as adults, however total income, measured by adding SSI benefit receipt to total labor market earnings, is still substantially lower for children who received SSI for the longest in childhood.

I estimate the labor market effects of gaining eligibility for Supplemental Security Income disability benefits during childhood. A Supreme Court decision eased the criteria to be considered disabled, disproportionately affecting child applicants with mental disorders. For individuals with mental disorders, each additional year of exposure to eased standards during childhood increased their SSI receipt by 0.3 years. The additional benefit receipt reduced cumulative labor market earnings through age 30 by $1,600 for each additional year of exposure for those with mental disorders. Importantly, this does not address the full range of outcomes that may be affected by receiving benefits.