Summary
Strand and Messel (2019) use Social Security Administration (SSA) administrative data and an examiner instrumental-variable (IV) design — the same method developed in Maestas, Mullen, and Strand (MMS, 2013) — to estimate the residual work capacity of marginal Disability Insurance (DI) applicants at the age-55 vocational grid threshold. For applicants aged 55–56, DI allowance reduces above-substantial-gainful-activity (SGA) employment by at most 11.2 percentage points (pp), an upper bound on the share who would work if denied. Comparing this to the same IV estimate for ages 52–53 (−12.9 pp), the 1.7 pp difference is statistically indistinguishable from zero. The paper's core policy conclusion: raising the vocational grid's age thresholds would primarily change the pathway to allowance (initial award vs. Administrative Law Judge (ALJ) appeal), not the final allowance rate or sustained labor force participation.
Key Claims
- The work-disincentive effect of DI allowance for ages 55–56 (IV method): Employed −21.4 pp; Above-SGA employed −11.2 pp; Earnings −$2,092 (not statistically significant). The −11.2 pp is an upper bound on residual work capacity for marginal applicants at this threshold.
- For ages 52–53 (more stringent grid regime): Employed −19.2 pp; Above-SGA employed −12.9 pp; Earnings −$980 (not significant). Difference in SGA effects: 1.7 pp, p > 0.05 — work discouragement is statistically the same on both sides of the age-55 cutoff.
- 76.7% of age 55–56 applicants are "always takers" (awarded DI regardless of examiner draw); 6.0% are "never takers"; 17.3% are marginal applicants (compliers, the population for whom the IV estimate is relevant). Relative to MMS 2013 (57% always takers for the full applicant pool), the age 55–56 group is heavily inframarginal.
- First-stage coefficient 0.173 (each 1 pp rise in examiner average allowance propensity raises applicant's allowance probability by 0.173 pp); Angrist-Pischke F-statistic = 271.5.
- The Autor, Maestas, Mullen, and Strand (2015) delay-channel IV, which adds examiner average processing time as a second instrument, produces a larger estimate (−23.7 pp above SGA) for ages 55–56. The delay-channel estimate is larger because it captures the behavioral effect of the application process itself (time out of labor force), not only the program's work disincentive — making it less appropriate for modeling a policy that changes award standards but not application incentives.
- The primary empirical effect of the age-55 grid cutoff is on the pathway to allowance, not on final allowance rates: before age 55, the majority of vocational-grid allowances occur at the ALJ hearing level; after 55, most occur at the initial Disability Determination Services (DDS) level. The cutoff makes it easier to receive an initial award, not materially more likely to receive any award eventually.
- 71.3% of denied age 55–56 applicants appeal or reapply; 68.5% of denied age 52–53 applicants appeal or reapply. The difference (2.8 pp) is weakly significant, suggesting modest but limited deterrence from the more stringent pre-55 standard.
- The Congressional Budget Office (CBO, 2012) projected that raising the vocational grid's age thresholds by 2 years would reduce awards by ~50,000 by 2022 and save $5.8 billion over 10 years. This paper's evidence implies those savings would primarily reflect slower pathways to allowance (more appeals, longer waits) rather than sustained increases in labor market activity.
- Data: Disability Information Online Data System (DIODS), Detail Earnings Records (DER), Payment History Update System (PHUS), Case Processing and Management System (CPMS), SSA-831 files. N = 171,880 (ages 55–56); N = 167,179 (ages 52–53).
Concepts Introduced or Extended
- Vocational Grid — central subject; provides the key causal estimate for the age-criteria reform debate
- Examiner IV — MMS 2013 method applied to age-55 threshold; F-statistic = 271.5; first-stage 0.173
- Causal Effects of DI Receipt — compares MMS vs. Autor et al. delay-channel methods; argues MMS is the right counterfactual for allowance-standard changes
- SSA Sequential Determination Process — pathway finding: the age-55 cutoff primarily shifts awards from the ALJ stage to the initial stage, not from DI to employment
Entities Mentioned
Quotes
"The estimate of the employment effect of DI is smaller for persons aged 55 to 56 than for the full applicant population, which is consistent with an older applicant being in poorer health and thus less able to work."
"These results suggest that if the grid's age criteria were made more stringent, the effect would likely be a change in the pathway to DI, not a reduction in the labor market exit associated with DI receipt."
"Our estimates suggest that the vocational grid is more efficient at sorting persons by their capacity for work than prior literature suggested."
My Take
This is policy analysis at its most direct: SSA's own economists use the agency's administrative data and a validated IV method to test the empirical premise of the most-discussed DI cost-saving reform proposal. The null result — work-disincentive effects statistically identical on both sides of the age-55 threshold — is strong evidence against the reform's core assumption that the vocational grid misclassifies a large pool of workers who could realistically return to employment. The paper's methodological care in distinguishing the MMS method (appropriate for policy simulation of allowance-standard changes) from the Autor et al. delay method (appropriate for studying processing-time effects) is a genuine contribution to the causal-inference literature on DI. The main limitation is local average treatment effect (LATE) external validity: the estimates apply to the 17.3% marginal applicants identified by examiner assignment variation, not to the 76.7% inframarginal always-takers who likely have even less residual work capacity. The paper implicitly argues this makes the policy case for reform even weaker — the complier work capacity is an upper bound, and the inframarginal majority is almost certainly lower.