Ben-Shalom and Mamun 2013 — Return-to-Work Outcomes Among Social Security Disability Insurance Program Beneficiaries

Summary

Longitudinal tracking of $\approx 4.2$ million disability insurance (DI) beneficiaries first awarded 1996–2004 through four return-to-work milestones: vocational-service enrollment, Trial Work Period (TWP) start, TWP completion, and suspension/termination for work (STW). Using linked Social Security Administration (SSA)–Rehabilitation Services Administration (RSA) administrative data and linear probability models, the study finds that only $5.2\%$ achieve STW within five years; age at award and impairment type are the two strongest predictors; and higher benefit amounts, administrative law judge (ALJ) award decisions, concurrent Supplemental Security Income (SSI), Medicare eligibility, and disabled adult child (DAC) status each reduce the probability of returning to work.

Key Claims

• Overall five-year rates: $7.5\%$ service enrollment, $9.8\%$ TWP start, $8.0\%$ TWP completion, $5.2\%$ STW; median time to any milestone $\approx 20$–$29$ months after award
• Age gradient is steep and survives multivariate controls: ages 18–24 achieve $12.6\%$ STW vs. $2.3\%$ for ages 50–57; rank order across age groups appears within the first year after award and is maintained through month 60
• Sensory impairments $\to$ highest return-to-work ($9.0\%$ STW); back/musculoskeletal $\to$ lowest ($\approx 3.0\%$ STW); intellectual disability anomaly: high TWP completion ($11.5\%$) but low STW ($4.5\%$), suggesting many work but remain below the substantial gainful activity (SGA) threshold
• ALJ award reduces TWP completion by $-4.1$ percentage points (pp) and STW by $-2.9$ pp vs. initial Disability Determination Services (DDS); consistent with administrative delay decaying employment attachment (Autor et al. 2015)
• Higher DI benefit amount reduces all four milestones by $1$–$3$ pp per $\$100$ of monthly benefit — income/substitution effect
• Being Black is associated with higher probability of achieving milestones ($+2$–$2.6$ pp on TWP/STW milestones) after full controls; higher education (each additional tier) also strongly positive
• Concurrent SSI receipt ($-1.4$ pp STW), Medicare eligibility at award ($-1.3$ pp STW), and DAC status ($-8.2$ pp STW) each reduce return-to-work probabilities, likely through benefit-loss aversion and prior work-history effects
• Large state fixed effects persist after controlling for beneficiary characteristics and state unemployment; Southern states (AL, GA, MS, SC, TN) lowest for STW; DC, VT, AK, MA, MN highest
• Award-month fixed effects capture discrete policy shocks: 1999 SGA increase, 2001 TWP minimum increase, and Ticket to Work (TTW) rollout show as inflection points in service-enrollment coefficients specifically

Concepts Introduced or Extended

• DI Return-to-Work Milestones
• DI Application Costs and Take-Up

Entities Mentioned

• Yonatan Ben-Shalom
• Arif Mamun
• Social Security Administration

Quotes

"We find that younger beneficiaries are more likely than older beneficiaries to achieve the return-to-work milestones within five years after award and that the likelihood of achieving the milestones varies substantially across impairment types."

"It might be more efficient to direct such efforts to recent awardees under the age of 40, as they are the most likely to return to work and might otherwise remain on the rolls for several decades."

My Take

The moral hazard / income effects are real but modest in magnitude; the bigger story is the demographic structure of the DI caseload — the majority of beneficiaries are middle-aged or older with musculoskeletal/physical impairments, exactly the combination with the lowest return-to-work rates. Policy interventions targeting younger beneficiaries with psychiatric or sensory impairments will reach a small but more responsive subgroup. The intellectual disability finding (high TWP, low STW) is underexplored here — it likely reflects sheltered or supported employment that does not cross the SGA threshold, not failed attempts, and has distinct policy implications from the rest of the psychiatric group.