Disability and distress: The effect of disability programs on financial outcomes
By: Desphande, M., Gross, T. and Su, Y
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Material type: 
BookPublisher: American Economic Journal: Applied Economics Description: 13(2), Apr, 2021: p.151-178.Subject(s): Disability, Distress
In:
American Economic Journal: Applied EconomicsSummary: What is the relationship between disability programs and financial distress? We provide the first evidence on this relationship using several markers of financial distress: bankruptcy, foreclosure, eviction, and home sale. Rates of these adverse financial events peak around the time of disability application. Using variation induced by an age-based eligibility rule, we find that disability allowance reduces the likelihood of bankruptcy by 20 percent, foreclosure by 33 percent, and home sale by 15 percent. We present evidence that these changes reflect true reductions in financial distress. Considering these extreme events increases the optimal disability benefit amount and suggests a shorter optimal waiting time between application and benefit receipt. – Reproduced
| Item type | Current location | Call number | Vol info | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | 13(2), Apr, 2021: p.151-178 | Available | AR125642 |
What is the relationship between disability programs and financial distress? We provide the first evidence on this relationship using several markers of financial distress: bankruptcy, foreclosure, eviction, and home sale. Rates of these adverse financial events peak around the time of disability application. Using variation induced by an age-based eligibility rule, we find that disability allowance reduces the likelihood of bankruptcy by 20 percent, foreclosure by 33 percent, and home sale by 15 percent. We present evidence that these changes reflect true reductions in financial distress. Considering these extreme events increases the optimal disability benefit amount and suggests a shorter optimal waiting time between application and benefit receipt. – Reproduced
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