WI20-03: Social Security Disability Insurance (SSDI) and Intergenerational Economic Mobility
Center for Financial Security
MetadataShow full item record
Access to economic opportunity in the United States is not uniform. In addition to heterogeneous mobility patterns by race/ethnicity and geography, new research suggests children whose parent(s) have work-limiting health conditions also experience lower economic mobility. Since Social Security Disability Insurance (DI) is designed to mitigate adverse economic consequences of work disability by monthly cash transfers, this study investigates whether this policy may also mitigate observed lower economic mobility for beneficiaries’ children. Using common measures of intergenerational economic mobility, this study examines economic mobility along two margins: 1) parents’ self-report of work-limiting health conditions, and 2) parent DI application history. Data come from the Survey of Income and Program Participation (SIPP) matched with Social Security Administration data. Children of parents with work limitations on average have 4.1 percentiles less upward mobility from the 25th percentile of parent income and 4.3 percentiles more downward mobility from the 75th percentile of parent income relative to children whose parents do not report work-limitations. Children’s economic mobility ought to decrease with declining parent health unless DI helps shapes outcomes. Using the SSA’s 5-step Disability Determination Process, parents initially awarded DI are hypothesized to have the worst health while parents initially denied (but later accepted) likely have marginally better health. Despite worse parent health, children of initial DI awardees have 3.6 percentiles more upward mobility relative to peers of parents who are initially denied benefits, suggesting DI may moderate economic mobility in the population.
Social Security and Disability Insurance
We build on [previous] literature examining the role of public policy moderating economic opportunity by investigating if Disability Insurance (DI) may moderate economic opportunity for children whose parents have health conditions that limit work. Not only has research previously identified this population as being at risk of decreased economic opportunity (Jajtner, 2020), but DI also specifically targets severe forms of work limitations in this population aiming to assuage economic disadvantages. We consider competing frameworks where DI could potentially improve economic opportunity with fewer financial constraints and better health or whether it could discourage economic opportunity through learned reliance on benefits . Our results suggest DI may play an important role in improving economic opportunity for children of work-limited parents, although further research using a causal framework is warranted. Participants at the University of Wisconsin – Madison (UW) Health Economics working group, UW Center for Financial Security seminar, Wisconsin Retirement and Disability Research Center Fall 2020 workshop, Fordham University Economics seminar, and Population Association of America annual meeting 2021 provided helpful suggestions for improvement.
Fletcher, Jason, Katie Jajtner, and Matt Messel. 2020. "WI20-03: Social Security Disability Insurance (SSDI) and Intergenerational Economic Mobility." FY2020 Research Projects. Retirement and Disability Research Center. https://cfsrdrc.wisc.edu/project/wi20-03.