The association between reported disability rates and social security disability insurance in high and low unemployment counties

The Social Security Disability Insurance Program (SSDI) is designed to insure workers against the threat of severe disabling conditions that prevent them from working. While one would expect that advances in medical treatment and improving overall health would lead to a decline in individuals receiving SSDI, the opposite is true. SSDI rolls have been steadily increasing since 1980. Hence, researchers and policymakers worry that the program has become a long-term uninsurance program that permanently removes individuals from the labor force who might have sought employment in its absence. Using county-year panel data, this study employs a fixed effects specification to test the sensitivity of SSDI receipt rates to reported disability rates and whether the relationship is different depending on high or low unemployment. The analysis shows a statistically significant, positive, yet small correlation between SSDI receipt and reported disabilities in counties with high unemployment compared to counties with low unemployment. These findings largely support the body of research that has connected increases in SSDI receipt during periods of economic recession and suggests that more research is needed into programmatic changes targeted for marginal applicants and beneficiaries.