Empirical Essays on Disability Insurance, Employment and Health

Abstract

The optimal design of tax and transfer policies involves understanding how income payments affect the behavior of recipients. This dissertation contributes to the public economics literature by examining how various income payments affect employment and health. The first chapter is focused on the relationship between disability payments and employment. The other two chapters explore short-term patterns in mortality and the role of income payments, which advances our understanding of the broader relationship between income and health. Chapter 1: The Employment Effects of Terminating Disability Benefits: Insights from Removing Drug and Alcohol Addictions as Disabling Conditions A challenge in designing return-to-work policies for Social Security Disability Insurance or Supplemental Security Income disability beneficiaries is identifying who is able to work. Using administrative data, I estimate the employment effects resulting from the 1996 removal of drug and alcohol addictions as disabling conditions, which eliminated the benefits of approximately 100,000 individuals. Terminated beneficiaries' employment increased by 20-30 percentage points, which is large relative to their work histories. The heterogeneity in employment is consistent with program participation initially increasing employment potential, before being outweighed by the negative consequences of being out of the labor force. Chapter 2: Liquidity, Economic Activity, and Mortality (with William N. Evans) We document a within-month mortality cycle where deaths decline before the first day of the month and spike after the first. This cycle is present across a wide variety of causes and demographic groups. A similar cycle exists for a range of economic activities, suggesting the mortality cycle may be due to short-term variation in levels of economic activity. Our results suggest a causal pathway whereby liquidity problems reduce activity, which in turn reduces mortality. These relationships may help explain the pro-cyclical nature of mortality. Chapter 3: The Short-term Mortality Consequences of Income Receipt (with William N. Evans) Researchers and retailers have documented that consumption declines before the receipt of income, and then rises afterwards. We identify a related phenomenon, where mortality rises immediately after income receipt. We find that mortality increases following the arrival of monthly Social Security payments, regular wage payments for military personnel, the 2001 tax rebates, and Alaska Permanent Fund dividend payments. The increase in short-run mortality is large, and occurs for a large number of causes of death.