The Impact of the Great Recession on SSDI Awards: A Birth-Cohort Analysis
Awards of Social Security Disability Insurance (SSDI) benefits to disabled workers experienced a rapid increase, then decline, in the decade following the start of the Great Recession (2007–2016). We hypothesize that the recession might have initially led to an acceleration of awards to workers who would have worked longer and entered SSDI much later had the economy remained stable. If so, the acceleration would have reduced awards during the recovery because some workers had entered SSDI earlier, instead. We used SSA administrative data and cross-state variation in how the business cycle evolved between 2007 and 2016 to estimate the extent to which the 2007–2009 recession accounts for the rapid growth in awards in the early part of the 10-year period as well as the extent to which the business cycle can explain the more recent decline. We examined the award experience of individual-year birth cohorts, by sex, to assess the extent to which they follow the hypothesized pattern of accelerated awards in the early period followed by deceleration later in the period, thereby controlling for the effects of contemporaneous changes in the age-sex composition of the disability-insured population that are confounded with business cycle effects in more aggregate award series. We find evidence for the acceleration hypothesis for men, particularly those age 49 to 59 at the beginning of the recession.