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Partial Benefits in the Social Security Disability Insurance Program

Authors

  • Na Yin

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    • Na Yin is an Assistant Professor of Economics and Public Affairs at the School of Public Affairs, Baruch College, City University of New York. The author is also a faculty associate at CUNY Institute for Demographic Research. Na Yin can be contacted via email: na.yin@baruch.cuny.edu. Yin would like to extend deep gratitude to Hugo Benítez-Silva for great advice and guidance throughout this project. Acknowledgment also goes to Selcuk Eren, Sanders Korenman, Cordelia Reimers, Steve Schmidt, Kalman Rupp, David Stapleton, and two anonymous referees for their helpful comments and suggestions. Yin would like to acknowledge the financial support from the Center for Retirement Research at Boston College and hospitality provide by RAND at an early stage of the project. Any remaining errors are my own.

Abstract

The current U.S. Social Security Disability Insurance program is an all-or-nothing system that has been criticized for creating strong work disincentives. In an empirically grounded and calibrated life-cycle model, I simulate behavioral responses to a partial disability benefit system, a policy alternative to the current program, which allows individuals to claim partial disability and combine earnings with disability benefits. Simulation results show financial savings for the program as well as welfare improvements for individuals with disabilities.

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