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<h1 itemprop="headline"><span class="bannerNote">PERSPECTIVES:</span> How Common is "Parking" among Social Security Disability Insurance Beneficiaries? Evidence from the 1999 Change in the Earnings Level of Substantial Gainful Activity</h1>
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<div id="hByline">by <span itemprop="author">Jody Schimmel, David C. Stapleton, and Jae G. Song</span><br> Social Security Bulletin, <abbr title="Volume">Vol.</abbr> 71, <abbr title="Number">No.</abbr> 4, 2011 (released November 2011)</div>
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<p id="synopsis" itemprop="description">Fewer Social Security Disability Insurance (<abbr class="spell">DI</abbr>) beneficiaries have their earnings suspended or terminated because of work than those who are actually working, partly because beneficiaries "park" earnings at a level below substantial gainful activity (<abbr class="spell">SGA</abbr>) to retain benefits. We assess the extent of parking by exploiting the 1999 change in the <abbr class="spell">SGA</abbr> earnings level from $500 to $700 monthly for nonblind beneficiaries using a difference-in-difference analysis that compares two annual cohorts of beneficiaries who completed their trial work period, one that was affected by the <abbr class="spell">SGA</abbr> change and one that was not. Our impact estimates, along with results from other sources, suggest that from 0.2 to 0.4 percent of all <abbr class="spell">DI</abbr> beneficiaries were parked below the <abbr class="spell">SGA</abbr> level in the typical month from 2002 through 2006. The <abbr class="spell">SGA</abbr> change did not yield any difference in mean earnings, although it did result in a small reduction in months spent off of the rolls because of work.</p>
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<div class="eightypercent">
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<p>Jody Schimmel is a senior researcher at Mathematica Policy Research; David C. Stapleton directs Mathematica's Center for Studying Disability Policy; and Jae G. Song is an economist with the Social Security Administration's Office of Quality Performance. This article is based on work supported by a grant (<abbr title="number">no.</abbr> 10-M-98362-5-01) from the Social Security Administration through the Michigan Retirement Research Center.</p>
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<p><i>Acknowledgments:</i> We gratefully acknowledge the work of Natalie Hazelwood at Mathematica Policy Research, who provided programming support for this article. Arif Mamun, also with Mathematica, provided helpful comments on an earlier draft of this article. We also wish to acknowledge helpful comments received from participants at the 2009 and 2010 Michigan Retirement Research Center annual research meetings, as well as anonymous reviewers of this journal.</p>
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<p>Contents of this publication are <a href="/policy/accessibility.html">not copyrighted</a>; any items may be reprinted, but citation of the <i>Social Security Bulletin</i> as the source is requested. The findings and conclusions presented in the <i>Bulletin</i> are those of the authors and do not necessarily represent the views of the Social Security Administration, Mathematica Policy Research, or the Michigan Retirement Research Center.</p>
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</div>
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</div>
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<h2>Introduction</h2>
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<div class="abbrtable">
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<table role="presentation">
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<caption>Selected Abbreviations</caption>
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<tr>
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<td><abbr class="spell">AWI</abbr></td>
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<td>average wage index</td>
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</tr>
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<tr>
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<td><abbr class="spell">DD</abbr></td>
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<td>difference in difference</td>
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</tr>
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<tr>
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<td><abbr class="spell">DI</abbr></td>
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<td>Disability Insurance</td>
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</tr>
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<tr>
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<td><abbr class="spell">EPE</abbr></td>
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<td>extended period of eligibility</td>
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</tr>
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<tr>
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<td><abbr class="spell">MEF</abbr></td>
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<td>Master Earnings File</td>
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</tr>
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<tr>
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<td><abbr class="spell">NSTW</abbr></td>
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<td>nonpayment status following suspension or termination for work</td>
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</tr>
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<tr>
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<td><abbr class="spell">SGA</abbr></td>
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<td>substantial gainful activity</td>
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</tr>
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<tr>
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<td><abbr class="spell">SSA</abbr></td>
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<td>Social Security Administration</td>
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</tr>
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<tr>
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<td><abbr class="spell">TRF</abbr></td>
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<td>Ticket Research File</td>
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</tr>
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<tr>
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<td><abbr class="spell">TWP</abbr></td>
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<td>trial work period</td>
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</tr>
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</table>
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</div>
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<p>The Social Security Disability Insurance (<abbr class="spell">DI</abbr>) program was designed to support qualified individuals who are unable to engage in "substantial gainful activity" (<abbr class="spell">SGA</abbr>) because of a medically determinable physical or mental impairment that is expected to result in death or last for at least 1 year.<sup><a href="#mn1" id="mt1">1</a></sup> Growth in the <abbr class="spell">DI</abbr> rolls in recent decades has been substantial; from 2000 through 2007 alone, the number of disabled-worker beneficiaries increased by approximately 2 million, to more than 7 million beneficiaries (<abbr class="spell">SSA</abbr> 2008). Autor and Duggan (2006) documented some of the reasons for this rapid expansion: aging of the labor force, growing percentages of women who meet the program's work history requirements, changing eligibility criteria, rising value of the Medicare benefits for which <abbr class="spell">DI</abbr> beneficiaries attain eligibility after 24 months on the rolls, and rising after-tax <abbr class="spell">DI</abbr> replacement rates for <span class="nobr">low-wage</span> workers.</p>
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<p>In addition to the rising number of people who receive <abbr class="spell">DI</abbr> benefits, employment rates among beneficiaries have been declining over the years. Employment among working-age people with disabilities is significantly lower than that for those without disabilities; in 2008, 39 percent of those with disabilities worked, compared with 77 percent of those without disabilities (Census Bureau 2009). This differential has not improved in recent decades, and in fact, seems to have worsened (Weathers and Wittenburg 2009). Further, relative to other workers, those with disabilities are increasingly likely to be employed on a <span class="nobr">part-time</span> rather than <span class="nobr">full-time</span> basis (Hotchkiss 2004). It appears that employment rates for successive cohorts of <abbr class="spell">DI</abbr> entrants after program entry were quite stable for those who entered from the mid-1980s through the 2000s (Von Wachter, Song, and Manchester, forthcoming), but it also appears that there was a decline in employment for those entering the <abbr class="spell">DI</abbr> program during and after the 2001 recession (Liu and Stapleton 2011).</p>
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<p>Once workers enter the <abbr class="spell">DI</abbr> program, a substantial minority returns to work, but a much smaller share leaves the rolls because of work. In each year, the number who leaves the rolls is minimal, but over time, more beneficiaries do ultimately have their benefits terminated because they are working. For instance, of those who received their <abbr class="spell">DI</abbr> awards in 1996, 28 percent had annual earnings of at least $1,000 in 1 or more of the next 10 years, but only 6.5 percent had their benefits suspended for at least 1 month because of work, and only 3.7 percent had their benefits terminated because of work (Liu and Stapleton 2011).</p>
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<p>One reason that the percentage of beneficiaries who have their earnings suspended or terminated because of work is far lower than the percentage who return to work might be because of "parking." Parking occurs when beneficiaries intentionally keep their earnings at a level below <abbr class="spell">SGA</abbr> to avoid loss of their <abbr class="spell">DI</abbr> benefits. If beneficiaries engage in <abbr class="spell">SGA</abbr>—in essence, earn more than $1,000 a month for nonblind and $1,640 for blind beneficiaries in 2010—for a sustained period of time, they risk losing their <abbr class="spell">DI</abbr> benefits (described in more detail later). Unless the earnings increase is large enough to more than make up for the benefit loss at the point of this "cash cliff," total income from earnings plus benefits actually declines. Hence, there is a strong incentive to "park"—to intentionally keep earnings just below the <abbr class="spell">SGA</abbr> level. Anecdotes about this behavior are widespread, but no statistics on the extent of this phenomenon are available.</p>
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<p>If parking is widespread, then policy reforms designed to increase work incentives for <abbr class="spell">DI</abbr> beneficiaries capable of <abbr class="spell">SGA</abbr> could potentially increase beneficiary earnings and reduce reliance on benefits. A $1-for-$2 benefit offset for earnings above the <abbr class="spell">SGA</abbr> level, currently being tested by the Social Security Administration (<abbr class="spell">SSA</abbr>), is an important example of such a reform. Widespread parking might also explain why so few beneficiaries have exited the rolls under the Ticket to Work program (Stapleton and others 2008). This phenomenon might also suggest that increases in the <abbr class="spell">SGA</abbr> earnings level could induce increases in <abbr class="spell">DI</abbr> entry by those able to engage in <abbr class="spell">SGA</abbr>. If, instead, parking is fairly rare, then efforts to address only the work-incentive issue would not very likely have large impacts on earnings and benefits, parking would not be an important reason for low exit rates under the Ticket to Work program, and <abbr class="spell">DI</abbr> entry would likely not be very sensitive to modest increases in the <abbr class="spell">SGA</abbr> level.</p>
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<p>It is possible to count the number of beneficiaries with annual earnings at a level that is just below 12 times the relevant <abbr class="spell">SGA</abbr> earnings level, but not all of such beneficiaries are parked; some are quite likely earning as much as they can, and some are likely temporarily protected from benefit loss because of earnings. Hence, any such count would overstate the number of parkers, as defined in this article. Our approach to estimating the number of beneficiaries purposefully keeping earnings below the <abbr class="spell">SGA</abbr> level in order to retain their benefits is to infer it from observed changes in earnings when the <abbr class="spell">SGA</abbr> level increases.</p>
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<p>In this article, we investigate the extent to which a large change in the nonblind <abbr class="spell">SGA</abbr> earnings level induced nonblind <abbr class="spell">DI</abbr> beneficiaries to park. Specifically, we estimate the impact of the change on the distribution of annual earnings for a beneficiary group directly affected by the change, as well as the impact on the number of months in which those beneficiaries were in nonpayment status following suspension or termination because of work (<abbr class="spell">NSTW</abbr>). In July 1999, the <abbr class="spell">SGA</abbr> earnings level for nonblind beneficiaries increased from $500 per month to $700 (<abbr class="spell">SSA</abbr> 2011; Social Security Advisory Board 2009). Before that time, the nonblind <abbr class="spell">SGA</abbr> level had been nominally set at $500 since 1990. After the 1999 increase, the nonblind <abbr class="spell">SGA</abbr> level was indexed to the average wage index (<abbr class="spell">AWI</abbr>), and, as a result, has increased nominally in every subsequent year except 2010. While the <abbr class="spell">SGA</abbr> level for nonblind beneficiaries increased substantially in 1999, the higher <abbr class="spell">SGA</abbr> level for the small share of statutorily blind beneficiaries increased only because of the small <abbr class="spell">AWI</abbr> adjustment (Table 1).</p>
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<div class="table" id="table1">
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<table>
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<caption><span class="tableNumber">Table 1. </span><abbr class="spell">SGA</abbr> earnings levels for blind and nonblind <abbr class="spell">DI</abbr> beneficiaries, <span class="nobr">1995–2006</span> (in dollars)</caption>
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<colgroup span="1" style="width:8em"></colgroup>
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<colgroup span="2" style="width:10em"></colgroup>
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<thead>
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<tr>
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<th class="stubHeading" scope="col">Year</th>
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<th scope="col">Nonblind <abbr class="spell">SGA</abbr> earnings level</th>
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<th scope="col">Blind <abbr class="spell">SGA</abbr> earnings level</th>
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</tr>
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</thead>
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<tbody>
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<tr>
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<th class="stub0" scope="row">1995</th>
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<td>500</td>
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<td>940</td>
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</tr>
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<tr>
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<th class="stub0" scope="row">1996</th>
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<td>500</td>
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<td>960</td>
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</tr>
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<tr>
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<th class="stub0" scope="row">1997</th>
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<td>500</td>
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<td>1,000</td>
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</tr>
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<tr>
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|
<th class="stub0" scope="row">1998</th>
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<td>500</td>
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<td>1,050</td>
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</tr>
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<tr>
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|
<th class="stub0" scope="row">1999</th>
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<td>500/700 <sup>a</sup></td>
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<td>1,110</td>
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</tr>
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|
<tr>
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|
<th class="stub0" scope="row">2000</th>
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|
<td>700</td>
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<td>1,170</td>
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</tr>
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|
<tr>
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|
<th class="stub0" scope="row">2001</th>
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|
<td>740</td>
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|
<td>1,240</td>
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</tr>
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<tr>
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|
<th class="stub0" scope="row">2002</th>
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|
<td>780</td>
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|
<td>1,300</td>
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|
</tr>
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|
<tr>
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|
<th class="stub0" scope="row">2003</th>
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|
<td>800</td>
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|
<td>1,330</td>
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|
</tr>
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|
<tr>
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|
<th class="stub0" scope="row">2004</th>
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|
<td>810</td>
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|
<td>1,350</td>
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</tr>
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<tr>
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<th class="stub0" scope="row">2005</th>
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<td>830</td>
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<td>1,380</td>
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</tr>
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<tr>
|
|
<th class="stub0" scope="row">2006</th>
|
|
<td>860</td>
|
|
<td>1,450</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="3">SOURCE: <abbr class="spell">SSA</abbr> (2011).</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="3">a. Nominal nonblind <abbr class="spell">SGA</abbr> earnings level increased from $500 to $700 on July 1, 1999.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<p>To our knowledge, there have been no rigorous studies of parking behavior and relatively few studies that assess the impact of <abbr class="spell">SGA</abbr> changes on earnings and benefits. Work from the 1970s found that the <abbr class="spell">SGA</abbr> earnings-level increases in 1966, 1968, and 1974 had no measurable effects on labor force participation rates or earnings among beneficiaries (Franklin 1976; Franklin and Hennessey 1979). A more recent report by the Government Accountability Office (<abbr class="spell">GAO</abbr> 2002) found that <abbr class="spell">SGA</abbr>-level increases affect the earnings of only a small portion of beneficiaries. Examining the period from 1985 through 1997, the report found that only 1 percent of all beneficiaries and only 7.4 percent of beneficiaries who worked in a given year had earnings greater than 75 percent of the level of <abbr class="spell">SGA</abbr> (annualized). In other words, modest changes in <abbr class="spell">SGA</abbr> were irrelevant for a vast majority of beneficiaries. The <abbr class="spell">GAO</abbr> report found that those who earned near the <abbr class="spell">SGA</abbr> level in a given year were very likely to experience substantial declines in earnings in the following years. In addition, the report also found that about 13 percent of beneficiaries who had earnings near the <abbr class="spell">SGA</abbr> level in 1985 had earnings close to that level a decade later, providing some evidence that some workers with earnings just below <abbr class="spell">SGA</abbr> might respond to increases in the <abbr class="spell">SGA</abbr> level and might engage in parking behavior. However, this evidence is not definitive—it is not known what share of those earning close to the <abbr class="spell">SGA</abbr> level would have had higher earnings if the <abbr class="spell">SGA</abbr> level had been higher. Recognizing the limitations of the data in measuring the effect of the <abbr class="spell">SGA</abbr> level on earnings, the <abbr class="spell">GAO</abbr> report called for more research before drawing conclusive findings.</p>
|
|
<p>There are three reasons why the previous studies might not have found a significant impact of the change in the <abbr class="spell">SGA</abbr> level on individual employment and earnings, even if the true impact was substantial. First, earlier studies did not distinguish between blind and nonblind beneficiaries, even though the earnings level of <abbr class="spell">SGA</abbr> faced by each is different. Second, and perhaps more importantly, the earlier studies did not distinguish between those beneficiaries who had completed the trial work period (<abbr class="spell">TWP</abbr>) and those who had not. The <abbr class="spell">TWP</abbr> consists of 9 months (not necessarily consecutive) over a rolling <span class="nobr">60-month</span> period during which the beneficiary can earn any amount without loss of benefits. We address the two limitations of earlier studies by using longitudinal Social Security administrative data on annual cohorts of nonblind <abbr class="spell">TWP</abbr> completers, focusing on the years just after they complete the <abbr class="spell">TWP</abbr>. The third limitation of previous studies is that they did not allow for the disparate effects of an increase in the <abbr class="spell">SGA</abbr> earnings level on beneficiaries earning below the old <abbr class="spell">SGA</abbr> level and on those who earned more than the old <abbr class="spell">SGA</abbr> and, consequently, had foregone their benefits for work, at least temporarily. In theory, an increase in the <abbr class="spell">SGA</abbr> level could induce some beneficiaries in this high-earnings group to reduce their earnings, countering any positive impact of the <abbr class="spell">SGA</abbr> increase on the earnings of those with lower earnings. Those offsetting effects might account for the absence of a substantial impact on the average earnings of beneficiaries in earlier studies. We address that limitation by studying changes in earnings of individuals grouped by the level of their earnings during the year in which they completed the <abbr class="spell">TWP</abbr>.</p>
|
|
<p>Specifically, we exploit the change in the nonblind <abbr class="spell">SGA</abbr> earnings level in 1999 to determine the extent to which the higher <abbr class="spell">SGA</abbr> level induced additional individuals to engage in parking behavior. Our analysis compares the longitudinal earnings and <abbr class="spell">NSTW</abbr> months of the cohort that completed its <abbr class="spell">TWP</abbr> in 1998 with corresponding outcomes for the 1996 <abbr class="spell">TWP</abbr> cohort. Those two cohorts faced the same nominal <abbr class="spell">SGA</abbr> level in the year they completed the <abbr class="spell">TWP</abbr>, but the nominal value for the 1998 cohort increased by $200 halfway through the first year after <abbr class="spell">TWP</abbr> completion, whereas it remained the same for the 1996 cohort until halfway through the third year after <abbr class="spell">TWP</abbr> completion. Our difference-in-difference (<abbr class="spell">DD</abbr>) methodology compares changes from the <abbr class="spell">TWP</abbr> completion year with changes in the second year after <abbr class="spell">TWP</abbr> completion for the 1998 cohort (spanning the increase in the <abbr class="spell">SGA</abbr> level) with corresponding changes for the 1996 cohort. The effect of the increase in the <abbr class="spell">SGA</abbr> earnings level is clearly evident, but its size is not very large.</p>
|
|
<p>In the Background section, we describe the "work-incentive" features of the <abbr class="spell">DI</abbr> program, which were designed to provide beneficiaries with an opportunity to test their ability to engage in <abbr class="spell">SGA</abbr> without immediate loss of benefits, and consider the theoretical impacts of an increase in the <abbr class="spell">SGA</abbr> level on earnings and benefit receipt. In the section that follows, we describe our data and sample and then detail the <abbr class="spell">DD</abbr> methodology used to identify the impact of the increase in the <abbr class="spell">SGA</abbr> earnings level. To justify the suitability of the <abbr class="spell">DD</abbr> approach, we then present earnings distributions of successive <abbr class="spell">TWP</abbr> cohorts. The next section highlights the results of our <abbr class="spell">DD</abbr> estimates and summarizes our findings from alternative specifications and robustness checks. The Conclusion and Discussion provides estimates of the extent to which beneficiaries overall engage in parking and a discussion of policy implications.</p>
|
|
<h2>Background and Conceptual Discussion</h2>
|
|
<p>The <abbr class="spell">SGA</abbr> earnings level is closely tied to the statutory definition of disability for adults, as described in the Introduction. <abbr class="spell">SSA</abbr> considers a person to be engaged in <abbr class="spell">SGA</abbr>, and therefore not disabled by the statutory definition, if unsubsidized earnings, net of any impairment-related work expenses, exceed the <abbr class="spell">SGA</abbr> level. Hence, beneficiaries may work, as long as the work is not considered to be <abbr class="spell">SGA</abbr>. The <abbr class="spell">TWP</abbr> was designed to encourage beneficiaries to return to <abbr class="spell">SGA</abbr>, by giving them a chance to test their ability to do so without benefit loss. An individual's <abbr class="spell">TWP</abbr> lasts for 9 (not necessarily consecutive) months in a rolling <span class="nobr">60-month</span> period, meaning that over the course of any <span class="nobr">5-year</span> period, a beneficiary can earn as much as he or she would like for up to 9 months and still remain on the <abbr class="spell">DI</abbr> rolls.</p>
|
|
<p>Months with sufficiently low earnings do not count toward the <span class="nobr">9-month</span> <abbr class="spell">TWP</abbr>. The <abbr class="spell">TWP</abbr> minimum earnings amount from 1990 through 2000 was $200 per month (or 40 hours of self-employment); it was increased to $530 per month (or 80 hours of self-employment) in 2001 and has been indexed to the <abbr class="spell">AWI</abbr> in each year since. In 2009, the monthly <abbr class="spell">TWP</abbr> minimum earnings amount was $700. In other words, only months in which a beneficiary earned more than $700 in 2009 counted toward his or her <abbr class="spell">TWP</abbr>; months in which earnings were below $700 did not affect completion of the <abbr class="spell">TWP</abbr>. The <abbr class="spell">TWP</abbr> limit is the same for both blind and nonblind <abbr class="spell">DI</abbr> beneficiaries. Because of the change in the <abbr class="spell">TWP</abbr> limit in 2001, we restrict our analysis to cohorts of <abbr class="spell">TWP</abbr> completers prior to that year because the earnings distributions of cohorts that completed the <abbr class="spell">TWP</abbr> before and after that change could be substantially different.</p>
|
|
<p>After exhausting the <abbr class="spell">TWP</abbr>, the beneficiary enters the extended period of eligibility (<abbr class="spell">EPE</abbr>), and benefits continue indefinitely if the beneficiary does not engage in <abbr class="spell">SGA</abbr>. If he or she does have earnings above the <abbr class="spell">SGA</abbr> level, benefits are paid for 3 additional grace period (<abbr class="spell">GP</abbr>) months. After that point, benefits are suspended in full during each month in which the beneficiary engages in <abbr class="spell">SGA</abbr>, but otherwise are paid in full until the 36<sup>th</sup> <abbr class="spell">EPE</abbr> month. If earnings are above <abbr class="spell">SGA</abbr> in the 36<sup>th</sup> month, benefits are terminated; otherwise full benefits continue until the first month of <abbr class="spell">SGA</abbr> after completing the <abbr class="spell">GP</abbr>, at which point they are terminated. This structure of benefits explains why at least some fraction of beneficiaries may engage in parking behavior. During the <abbr class="spell">TWP</abbr> and <abbr class="spell">GP</abbr>, beneficiaries have little incentive to restrain earnings, as benefits continue regardless of the amount of earnings in those months. After finishing the <abbr class="spell">TWP</abbr> and <abbr class="spell">GP</abbr>, however, there is strong incentive to restrain earnings below the <abbr class="spell">SGA</abbr> level.</p>
|
|
<p>Among beneficiaries who have completed their <abbr class="spell">TWP</abbr> and are in their <abbr class="spell">EPE</abbr>, the expected effect of an <abbr class="spell">SGA</abbr> increase on earnings and <abbr class="spell">NSTW</abbr> months depends on what their earnings would have been in the absence of the increase. First, beneficiaries who would have had earnings below the initial <abbr class="spell">SGA</abbr> level might increase their earnings by up to $200 because they could do so without exceeding the new, higher <abbr class="spell">SGA</abbr> level. For example, someone who kept his or her monthly earnings at $475 to stay below an <abbr class="spell">SGA</abbr> level of $500 might now earn $675 if the <abbr class="spell">SGA</abbr> level was increased to $700. For those individuals, we would expect to see higher average annual earnings, but no change in the number of months spent off the rolls for work because these beneficiaries would continue to receive benefits in each month they worked.</p>
|
|
<p>Second, beneficiaries who would have earned above the new <abbr class="spell">SGA</abbr> level and thus lost their benefits might make an effort to earn less than the new level to retain benefits. Consider, for example, someone with a <abbr class="spell">DI</abbr> benefit of $600 per month who has the potential to earn $1,200. With an <abbr class="spell">SGA</abbr> level of $500, the beneficiary could retain benefits by keeping earnings just below $500, for total monthly income of just under $1,100, or could forego benefits and increase income to $1,200. Under an <abbr class="spell">SGA</abbr> level of $700, that same individual could retain benefits by keeping earnings just below $700, for total monthly income of just under $1,300—more than the beneficiary would earn if he or she were to forego benefits. This individual has a stronger incentive to keep earnings below the new <abbr class="spell">SGA</abbr> level than below the initial level and is therefore more likely to reduce earnings and retain benefits under the new level. More generally, we would expect beneficiaries who would have earned above $700 under the old <abbr class="spell">SGA</abbr> level to decrease their earnings under the new <abbr class="spell">SGA</abbr> level because the required reduction in earnings to keep benefits is lower, and therefore they would have fewer months with cash benefits suspended.</p>
|
|
<p>Third, beneficiaries who would have earned an amount between the initial $500 <abbr class="spell">SGA</abbr> level and the new $700 level, and thus would have left the rolls, are not likely to change the amount they earn by much but will be able to retain their benefits. Those individuals would have left the rolls under the initial <abbr class="spell">SGA</abbr> level despite the strong incentive to restrain their earnings and remain on the rolls.</p>
|
|
<p>Given the relationship between earnings in the absence of the <abbr class="spell">SGA</abbr> increase and the effect of the <abbr class="spell">SGA</abbr> increase on earnings, we would expect to see a change in the cumulative distribution of earnings for <abbr class="spell">TWP</abbr> completers much like the stylized change displayed in Chart 1, assuming that all else is held constant. The percentage of beneficiaries with earnings below the initial <abbr class="spell">SGA</abbr> level is expected to fall, as the percentage with earnings above the new <abbr class="spell">SGA</abbr> level is also expected to fall, and the old and new cumulative distributions will cross at some level of earnings between the old and new <abbr class="spell">SGA</abbr> levels.</p>
|
|
<div class="chartCenter">
|
|
<div class="chart700" id="chart1">
|
|
<div class="title">Chart 1.<br>Stylized shift in the earnings distribution of <abbr class="spell">TWP</abbr> completer cohorts after an <abbr class="spell">SGA</abbr> earnings-level increase</div>
|
|
<div class="scrollChart"><img src="v71n4p77_chart01.gif" alt="Hypothetical line chart described in the text." width="700" height="357" /></div>
|
|
<div class="onlyNote">SOURCE: Authors' illustration of the hypothetical effect of an <abbr class="spell">SGA</abbr> earnings-level change on the distribution of earnings.</div>
|
|
</div>
|
|
</div>
|
|
<h2>Data and Sample Description</h2>
|
|
<p>Our analysis sample was drawn from the 2007 Ticket Research File (<abbr class="spell">TRF</abbr>).<sup><a href="#mn2" id="mt2">2</a></sup> It consists of longitudinal Social Security administrative data on all working-age beneficiaries who participated in the <abbr class="spell">DI</abbr> or Supplemental Security Income (<abbr class="spell">SSI</abbr>) programs for at least 1 month between January 1996 and December 2007. The <abbr class="spell">TRF</abbr> contains demographic information about beneficiaries, as well as a monthly history of their <abbr class="spell">DI</abbr> and <abbr class="spell">SSI</abbr> benefit receipt, any time spent off of the disability rolls, use of work incentives (including the month of <abbr class="spell">TWP</abbr> completion), and many other variables generated from Social Security administrative records. Data from the <abbr class="spell">TRF</abbr> were merged with annual earnings records contained in <abbr class="spell">SSA</abbr>'s Master Earnings File (<abbr class="spell">MEF</abbr>) for several years before and after <abbr class="spell">TWP</abbr> completion.</p>
|
|
<p>Using the <abbr class="spell">TRF</abbr>, we identified 138,142 <abbr class="spell">DI</abbr> beneficiaries who completed their <abbr class="spell">TWP</abbr>: 61,953 in 1996 and 76,189 in 1998. We excluded those whose birth date indicated they were younger than age 18 or older than age 59 at the end of the calendar year during which they completed their <abbr class="spell">TWP</abbr>, who had died within the 5 calendar years following <abbr class="spell">TWP</abbr> completion, or who had inconsistent data related to their initial <abbr class="spell">DI</abbr> entitlement and <abbr class="spell">TWP</abbr> completion date. Finally, we excluded beneficiaries who were determined to be blind, as they were subject to the <abbr class="spell">SGA</abbr> level for blind individuals, which did not change during this time.<sup><a href="#mn3" id="mt3">3</a></sup> That process left a final sample of 116,965 <abbr class="spell">DI</abbr> beneficiaries (52,490 in 1996 and 64,475 in 1998), or 85 percent of all <abbr class="spell">TWP</abbr> completers in those 2 years. Those beneficiaries include a small number of disabled adult children and disabled adult <span class="nobr">widow(er)s</span> of Social Security beneficiaries. While those two subgroups must meet the same disability criteria as <abbr class="spell">DI</abbr> beneficiaries, most of the children and all of the <span class="nobr">widow(er)s</span> are technically <span class="nobr">Old-Age</span> and Survivors Insurance program beneficiaries, rather than <abbr class="spell">DI</abbr> beneficiaries, because they are receiving benefits as a dependent of a retired or deceased Social Security beneficiary. For simplicity of exposition, we refer to all of the <abbr class="spell">TWP</abbr> completers as <abbr class="spell">DI</abbr> beneficiaries in the remainder of this article.</p>
|
|
<p>Understanding differences in the demographics of <abbr class="spell">TWP</abbr> completer cohorts is important in assessing the extent to which observed changes in outcomes might reflect compositional differences in the cohorts as opposed to impacts of the <abbr class="spell">SGA</abbr> increase. The demographic profile of <abbr class="spell">TWP</abbr> completer cohorts in 1996 and 1998 was quite similar, suggesting that changes we observe are unlikely to solely reflect changing demographics of <abbr class="spell">TWP</abbr> completers (Table 2). Education data is missing for a substantial proportion of both cohorts, which is unfortunate because it is likely a strong predictor of work activity and earnings. However, the proportion with missing data is similar across cohorts, and we control for it in our regression models. The later cohort, however, was somewhat more likely to be older than age 40, female, nonwhite, and have certain primary disabling conditions, such as back problems and major affective disorders. This generally mirrors the changing demographic profile of all <abbr class="spell">DI</abbr> beneficiaries during this period (<abbr class="spell">SSA</abbr> 1997 and 2001).</p>
|
|
<div class="table" id="table2">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 2. </span>Demographic profile of nonblind <abbr class="spell">TWP</abbr> completers, 1996 and 1998 cohorts (in percent)</caption>
|
|
<colgroup span="1" style="width:20em"></colgroup>
|
|
<colgroup span="2" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" scope="col">Characteristic</th>
|
|
<th scope="col">1996</th>
|
|
<th scope="col">1998</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr class="shaded">
|
|
<th class="stub2" scope="row">Sample size</th>
|
|
<td>52,490</td>
|
|
<td>64,475</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Age</th>
|
|
<td colspan="2"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Under 30</th>
|
|
<td>21.1</td>
|
|
<td>19.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row"><span class="nobr">30–39</span></th>
|
|
<td>32.9</td>
|
|
<td>31.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row"><span class="nobr">40–49</span></th>
|
|
<td>29.1</td>
|
|
<td>30.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row"><span class="nobr">50–59</span></th>
|
|
<td>16.9</td>
|
|
<td>19.5</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Sex</th>
|
|
<td colspan="2"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Male</th>
|
|
<td>57.4</td>
|
|
<td>55.5</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Female</th>
|
|
<td>42.6</td>
|
|
<td>44.5</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Race</th>
|
|
<td colspan="2"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">White</th>
|
|
<td>71.7</td>
|
|
<td>70.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Black</th>
|
|
<td>20.0</td>
|
|
<td>21.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Hispanic</th>
|
|
<td>3.9</td>
|
|
<td>4.4</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Other</th>
|
|
<td>2.5</td>
|
|
<td>2.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Missing</th>
|
|
<td>1.9</td>
|
|
<td>1.7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Primary disabling condition</th>
|
|
<td colspan="2"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Schizophrenia or psychoses; anxiety and neurotic disorders; other mental disorders </th>
|
|
<td>14.1</td>
|
|
<td>13.5</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Major affective disorders</th>
|
|
<td>11.9</td>
|
|
<td>13.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Mental retardation</th>
|
|
<td>10.4</td>
|
|
<td>10.4</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Musculoskeletal system and back disorders</th>
|
|
<td>8.9</td>
|
|
<td>9.7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Injuries</th>
|
|
<td>4.4</td>
|
|
<td>4.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Nervous system</th>
|
|
<td>4.1</td>
|
|
<td>4.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Circulatory system</th>
|
|
<td>3.1</td>
|
|
<td>3.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Neoplasms</th>
|
|
<td>2.2</td>
|
|
<td>2.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Endocrine/nutritional</th>
|
|
<td>2.2</td>
|
|
<td>2.7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Other (known)</th>
|
|
<td>38.4</td>
|
|
<td>36.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Other (unknown)</th>
|
|
<td>0.3</td>
|
|
<td>0.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Education (years)</th>
|
|
<td colspan="2"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row"><span class="nobr">0–8</span></th>
|
|
<td>3.7</td>
|
|
<td>3.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row"><span class="nobr">9–11</span></th>
|
|
<td>9.3</td>
|
|
<td>9.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">12</th>
|
|
<td>28.9</td>
|
|
<td>27.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row"><span class="nobr">13–15</span></th>
|
|
<td>8.2</td>
|
|
<td>8.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">16 or more</th>
|
|
<td>5.8</td>
|
|
<td>5.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Missing</th>
|
|
<td>44.1</td>
|
|
<td>45.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Concurrent (<abbr class="spell">DI</abbr> and <abbr class="spell">SSI</abbr>) beneficiary</th>
|
|
<td>10.2</td>
|
|
<td>10.2</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="3">SOURCE: <abbr class="spell">SSA</abbr>'s 2007 <abbr class="spell">TRF</abbr>.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="3">NOTES: Other known primary disabling conditions include visual impairments, disorders and diseases of the genitourinary system, severe hearing impairment, <abbr class="spell">HIV</abbr>/<abbr>AIDS</abbr>, digestive system, respiratory system, blood/blood-forming diseases, and infectious/parasitic diseases. Each of these categories included fewer than 2 percent of <abbr class="spell">TWP</abbr> completers in 1996.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<p>The key outcomes in our analysis are nominal annual earnings and percentage of months in a calendar year spent off the <abbr class="spell">DI</abbr> rolls for work. Unfortunately, monthly data on earnings are not available, even though they would have been ideal for assessing earnings relative to the monthly <abbr class="spell">SGA</abbr> level. Instead, we converted annual earnings to mean monthly earnings for the year by dividing the annual amount by 12, for purposes of comparison with the monthly <abbr class="spell">SGA</abbr> amount. Because earnings might vary from month to month, a value of mean monthly earnings greater than (less than) the <abbr class="spell">SGA</abbr> amount does not imply that earnings in all months are above (below) the <abbr class="spell">SGA</abbr> amount. We also note that annual earnings reported in the <abbr class="spell">MEF</abbr> do not always accurately represent a beneficiary's earnings from all paid work during the year. In some cases, earnings are not reported by the employer. In other cases, the reported earnings might be in the form of delayed compensation of some sort from an earlier year. There is no reason to think that such errors will bias the results. It seems likely that earnings not reported in the <abbr class="spell">MEF</abbr> account for the fact that a small share of <abbr class="spell">TWP</abbr> completers has no <abbr class="spell">MEF</abbr>-reported earnings in their <abbr class="spell">TWP</abbr> completion year.</p>
|
|
<p>We also examine the impact of an <abbr class="spell">SGA</abbr> earnings-level increase on a monthly measure: the number of months that beneficiaries forego benefits because they are working. This measure is based on a variable contained in the <abbr class="spell">TRF</abbr>, an indicator for <abbr class="spell">NSTW</abbr> months (Schimmel and Stapleton 2011). That variable identifies months in which cash benefits were suspended or terminated because of earnings above the <abbr class="spell">SGA</abbr> level. While the measure includes both suspensions and terminations, the latter are irrelevant in our case because we are focusing on the year of <abbr class="spell">TWP</abbr> completion and 2 years later, when benefits can only be suspended for work, not terminated.</p>
|
|
<h2>Methodology</h2>
|
|
<p>This section begins by describing the rationale for using selected <abbr class="spell">TWP</abbr> completion cohorts for our <abbr class="spell">DD</abbr> analysis. It then describes our dependent variables, model specification, and predictions for key parameter estimates. It concludes with a discussion of the role of confounding factors on our estimator and the reasoning for using nominal as opposed to real earnings in our estimation.</p>
|
|
<h3>Selection of <abbr class="spell">TWP</abbr> Completer Cohorts Suitable for <abbr class="spell">DD</abbr> Analysis</h3>
|
|
<p>Like other <abbr class="spell">DD</abbr> estimators, the validity of our analysis relies on the assumption that the cohort subject to the change in the earnings level of <abbr class="spell">SGA</abbr> would have behaved similarly to the cohort not subject to the change, and that the trend in outcomes across those cohorts would have been the same if not for the change in <abbr class="spell">SGA</abbr> (Imbens and Wooldridge 2007). Because of that assumption, we ultimately selected the 1996 and 1998 <abbr class="spell">TWP</abbr> completer cohorts for our analysis. The 1996 cohort—the earliest cohort for which we had complete data—was not affected by the change in the <abbr class="spell">SGA</abbr> earnings level until after the first 36 <abbr class="spell">EPE</abbr> months; the 1997 cohort experienced the <abbr class="spell">SGA</abbr> earnings-level increase in the middle of the second calendar year after <abbr class="spell">TWP</abbr> completion; the 1998 cohort experienced it in the first calendar year after <abbr class="spell">TWP</abbr> completion; the 1999 cohort experienced it during the <abbr class="spell">TWP</abbr> calendar year; and all cohorts from 2000 onward were subject to the higher <abbr class="spell">SGA</abbr> earnings level in the entirety of their <abbr class="spell">TWP</abbr> year and all subsequent years. By comparing the 1998 cohort with the 1996 cohort, we consider one cohort that did not experience an <abbr class="spell">SGA</abbr> earnings-level change from the <abbr class="spell">TWP</abbr> year to 2 years later (the 1996 cohort, using data from 1996 and 1998) with a cohort that did experience the <abbr class="spell">SGA</abbr> change during a similar period (the 1998 cohort, using data from 1998 and 2000).</p>
|
|
<p>The 2000 and later cohorts were also candidates for comparison groups, but we elected not to use them because of two external factors that quite likely had a substantial effect on their outcomes (Liu and Stapleton 2011). The first factor is the 2001 recession, and the second is the 2001 increase in the minimum earnings amount for a <abbr class="spell">TWP</abbr> month. Both of those factors would substantially bias any estimates that used the 2000 cohort, or any later cohort, as the comparison cohort.</p>
|
|
<p>Chart 2 shows the cumulative distribution of average monthly earnings (annual earnings divided by 12) for the 1996 and 1998 completer cohorts in the <abbr class="spell">TWP</abbr> completion year as well as in the second year following <abbr class="spell">TWP</abbr> completion year.<sup><a href="#mn4" id="mt4">4</a></sup> We conclude that the <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> distributions for the 1996 and 1998 cohorts are quite comparable, apart from a small rightward shift from 1996 to 1998 that could reasonably be attributed to wage growth. Differences in the second year after the <abbr class="spell">TWP</abbr> completion year presumably reflect comparable wage growth, as well as the effects of the 1999 <abbr class="spell">SGA</abbr> earnings-level increase.</p>
|
|
<div class="chartCenter">
|
|
<div class="chart700" id="chart2">
|
|
<div class="title">Chart 2.<br>Cumulative distribution of monthly earnings in the <abbr class="spell">TWP</abbr> completion year and in the second year after <abbr class="spell">TWP</abbr> completion, 1996 and 1998 cohorts</div>
|
|
<div class="scrollChart"><img src="v71n4p77_chart02.gif" alt="Line chart with tabular version below." width="700" height="296" /></div>
|
|
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
|
|
<table>
|
|
<caption><span class="tableNumber">Table equivalent for Chart 2. </span>Cumulative distribution of monthly earnings in the <abbr class="spell">TWP</abbr> completion year and in the second year after <abbr class="spell">TWP</abbr> completion, 1996 and 1998 cohorts</caption>
|
|
<colgroup span="1" style="width:6em"></colgroup>
|
|
<colgroup span="2" style="width:6em"></colgroup>
|
|
<colgroup span="2" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th rowspan="2" class="stubHeading" scope="colgroup">Monthly earnings ($)</th>
|
|
<th colspan="2" class="spanner" scope="colgroup"><abbr class="spell">TWP</abbr> completion year</th>
|
|
<th colspan="2" class="spanner" scope="colgroup">Second year after <abbr class="spell">TWP</abbr> completion</th>
|
|
</tr>
|
|
<tr>
|
|
<th scope="col">1996 cohort</th>
|
|
<th scope="col">1998 cohort</th>
|
|
<th scope="col">1996 cohort</th>
|
|
<th scope="col">1998 cohort</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub0" scope="row">350</th>
|
|
<td>43.12</td>
|
|
<td>39.21</td>
|
|
<td>51.03</td>
|
|
<td>47.45</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">450</th>
|
|
<td>53.96</td>
|
|
<td>50.19</td>
|
|
<td>59.01</td>
|
|
<td>54.23</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">550</th>
|
|
<td>61.01</td>
|
|
<td>57.18</td>
|
|
<td>63.76</td>
|
|
<td>59.71</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">650</th>
|
|
<td>66.39</td>
|
|
<td>62.40</td>
|
|
<td>66.86</td>
|
|
<td>64.05</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">750</th>
|
|
<td>70.57</td>
|
|
<td>66.74</td>
|
|
<td>69.51</td>
|
|
<td>66.74</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">850</th>
|
|
<td>74.09</td>
|
|
<td>70.34</td>
|
|
<td>71.83</td>
|
|
<td>69.16</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">950</th>
|
|
<td>77.13</td>
|
|
<td>73.53</td>
|
|
<td>73.82</td>
|
|
<td>71.20</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">1,050</th>
|
|
<td>79.76</td>
|
|
<td>76.21</td>
|
|
<td>75.69</td>
|
|
<td>73.09</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="noNotes" colspan="5"> </td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="firstNote">SOURCE: <abbr class="spell">SSA</abbr>'s 2007 <abbr class="spell">TRF</abbr> data merged with <abbr class="spell">MEF</abbr> data.</div>
|
|
<div class="lastNote">NOTES: Nominal earnings are in $100 intervals; the dollar value denoted is the midpoint of the interval. Level differences across the cohorts reflect our use of nominal earnings; when earnings were adjusted by the contemporaneous <abbr class="spell">AWI</abbr>, those level differences disappeared.</div>
|
|
</div>
|
|
</div>
|
|
<p>Visual inspection of the cumulative distributions in Chart 2 does not reveal any obvious effect of the <abbr class="spell">SGA</abbr> earnings-level increase. The effect can be seen, however, by adjusting the earnings distribution for the 1998 cohort in the second <span class="nobr">post-<abbr class="spell">TWP</abbr></span> year for the difference between the <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> distributions for the 1998 and 1996 cohorts and comparing the result with the second <span class="nobr">post-<abbr class="spell">TWP</abbr></span> year distribution for the 1996 cohort (Chart 3). The adjusted distribution for the 1998 cohort in the second <span class="nobr">post-<abbr class="spell">TWP</abbr></span> year is the actual earnings distribution shifted upward by the vertical difference between the <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> distributions for the two cohorts, as shown in Chart 2.</p>
|
|
<div class="chartCenter">
|
|
<div class="chart700" id="chart3">
|
|
<div class="title">Chart 3.<br>Cumulative distribution of monthly earnings in the second year after <abbr class="spell">TWP</abbr> completion, 1996 cohort (actual earnings) and 1998 cohort (adjusted earnings)</div>
|
|
<div class="scrollChart"><img src="v71n4p77_chart03.gif" alt="Line chart with tabular version below." width="700" height="346" /></div>
|
|
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
|
|
<table>
|
|
<caption><span class="tableNumber">Table equivalent for Chart 3. </span>Cumulative distribution of monthly earnings in the second year after <abbr class="spell">TWP</abbr> completion, 1996 cohort (actual earnings) and 1998 cohort (adjusted earnings)</caption>
|
|
<colgroup span="1" style="width:10em"></colgroup>
|
|
<colgroup span="2" style="width:8em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" scope="col">Monthly earnings ($)</th>
|
|
<th scope="col">1996 cohort</th>
|
|
<th scope="col">1998 cohort</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub0" scope="row">350</th>
|
|
<td>51.03</td>
|
|
<td>51.37</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">450</th>
|
|
<td>59.01</td>
|
|
<td>58.00</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">550</th>
|
|
<td>63.76</td>
|
|
<td>63.54</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">650</th>
|
|
<td>66.86</td>
|
|
<td>68.04</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">750</th>
|
|
<td>69.51</td>
|
|
<td>70.58</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">850</th>
|
|
<td>71.83</td>
|
|
<td>72.92</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">950</th>
|
|
<td>73.82</td>
|
|
<td>74.79</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">1,050</th>
|
|
<td>75.69</td>
|
|
<td>76.64</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">1,150</th>
|
|
<td>77.34</td>
|
|
<td>77.95</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">1,250</th>
|
|
<td>79.06</td>
|
|
<td>79.25</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="noNotes" colspan="3"> </td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="firstNote">SOURCE: <abbr class="spell">SSA</abbr>'s 2007 <abbr class="spell">TRF</abbr> data merged with <abbr class="spell">MEF</abbr> data.</div>
|
|
<div class="lastNote">NOTES: The 1998 cohort distribution has been shifted upward by the vertical distance between the <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> distribution for the two cohorts. Nominal earnings are in $100 intervals; the dollar value denoted is the midpoint of the interval.</div>
|
|
</div>
|
|
</div>
|
|
<p>What emerges is a pattern that matches the exaggerated stylized pattern of <a href="#chart1">Chart 1</a>. The adjusted distribution for the 1998 cohort, subject to the higher <abbr class="spell">SGA</abbr>, crosses the distribution for the 1996 cohort between the old and new <abbr class="spell">SGA</abbr> values ($500 and $700). That is, the comparison is consistent with the prediction that the increase in the <abbr class="spell">SGA</abbr> level increased the earnings of some who would otherwise have had earnings below $500 and reduced the earnings of some who would otherwise have had earnings above $700. The difference-in-difference estimates presented in the next section provide a more rigorous assessment of the extent of those visible changes.</p>
|
|
<p>Turning to <abbr class="spell">NSTW</abbr> months during the <abbr class="spell">TWP</abbr> completion year, the values for the 1996 and 1998 cohorts were also similar (Chart 4). The pattern for both cohorts was in line with expectations; as average monthly earnings during a year increased, the mean <abbr class="spell">NSTW</abbr> months increased, reflecting more months with earnings above <abbr class="spell">SGA</abbr>. There were small differences within earnings categories, which might reflect wage growth or other factors. The largest difference, for those with average monthly earnings in excess of $1,000, was only 0.2 months. Hence, we conclude that <abbr class="spell">NSTW</abbr> months during the <abbr class="spell">TWP</abbr> year are a strong base for the <abbr class="spell">DD</abbr> estimator of the impact of the <abbr class="spell">SGA</abbr> earnings-level increase on time off of the rolls for work.</p>
|
|
<div class="chartCenter">
|
|
<div class="chart700" id="chart4">
|
|
<div class="title">Chart 4.<br>Mean number of <abbr class="spell">NSTW</abbr> months in the <abbr class="spell">TWP</abbr> completion year, by <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> average monthly earnings interval, 1996 and 1998 cohorts</div>
|
|
<div class="scrollChart"><img src="v71n4p77_chart04.gif" alt="Bar chart with tabular version below." width="700" height="374" /></div>
|
|
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
|
|
<table>
|
|
<caption><span class="tableNumber">Table equivalent for Chart 4. </span>Mean number of <abbr class="spell">NSTW</abbr> months in the <abbr class="spell">TWP</abbr> completion year, by <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> average monthly earnings interval, 1996 and 1998 cohorts</caption>
|
|
<colgroup span="1" style="width:10em"></colgroup>
|
|
<colgroup span="2" style="width:8em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" scope="col"><abbr class="spell">TWP</abbr> completion year earnings interval ($)</th>
|
|
<th scope="col">1996 cohort</th>
|
|
<th scope="col">1998 cohort</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub0" scope="row">Less than 500</th>
|
|
<td>0.2</td>
|
|
<td>0.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row"><span class="nobr">500–699</span></th>
|
|
<td>1.0</td>
|
|
<td>0.9</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row"><span class="nobr">700–999</span></th>
|
|
<td>1.7</td>
|
|
<td>1.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">1,000 or more</th>
|
|
<td>2.8</td>
|
|
<td>3.0</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="noNotes" colspan="3"> </td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="onlyNote">SOURCE: <abbr class="spell">SSA</abbr>'s 2007 <abbr class="spell">TRF</abbr> data merged with <abbr class="spell">MEF</abbr> data.</div>
|
|
</div>
|
|
</div>
|
|
<h3>Model Specification</h3>
|
|
<p>We use a <abbr class="spell">DD</abbr> strategy to estimate the impact of the <abbr class="spell">SGA</abbr> increase on the earnings distribution, as well as on monthly earnings and <abbr class="spell">NSTW</abbr> months in the second year after <abbr class="spell">TWP</abbr> completion. That is, we compare changes in outcome variables for the 1996 and 1998 cohorts from the <abbr class="spell">TWP</abbr> year with those in the second year after the <abbr class="spell">TWP</abbr> completion year. As discussed earlier, the 1998 cohort experienced a large increase in its nonblind <abbr class="spell">SGA</abbr> earnings amount during its first <span class="nobr">post-<abbr class="spell">TWP</abbr></span> year, whereas the 1996 cohort did not.</p>
|
|
<p> We used a regression-based <abbr class="spell">DD</abbr> estimator to control for the possible effects of observable differences in the characteristics of the two cohorts. The estimator is based on the following standard model:</p>
|
|
<div class="equation">
|
|
<math display="inline">
|
|
<msub>
|
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<mi>Y</mi>
|
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<mrow>
|
|
<mi>i</mi>
|
|
<mi>t</mi>
|
|
</mrow>
|
|
</msub>
|
|
<mo>=</mo>
|
|
<mi>α</mi>
|
|
<mo>+</mo>
|
|
<mi>β</mi>
|
|
<mo>⁢</mo>
|
|
<msub>
|
|
<mi>D</mi>
|
|
<mi>t</mi>
|
|
</msub>
|
|
<mo>+</mo>
|
|
<mi>δ</mi>
|
|
<mo>⁢</mo>
|
|
<msub>
|
|
<mi>C</mi>
|
|
<mi>i</mi>
|
|
</msub>
|
|
<mo>+</mo>
|
|
<mi>γ</mi>
|
|
<mo>⁢</mo>
|
|
<msub>
|
|
<mi>C</mi>
|
|
<mi>i</mi>
|
|
</msub>
|
|
<mo>⁢</mo>
|
|
<msub>
|
|
<mi>D</mi>
|
|
<mi>t</mi>
|
|
</msub>
|
|
<mo>+</mo>
|
|
<mrow>
|
|
<mi>π</mi>
|
|
<mo>′</mo>
|
|
</mrow>
|
|
<mo>⁢</mo>
|
|
<msub>
|
|
<mi>X</mi>
|
|
<mi>i</mi>
|
|
</msub>
|
|
<mo>+</mo>
|
|
<msub>
|
|
<mi>ε</mi>
|
|
<mrow>
|
|
<mi>i</mi>
|
|
<mi>t</mi>
|
|
</mrow>
|
|
</msub>
|
|
</math>
|
|
, </div>
|
|
<p class="noindent">where
|
|
<math display="inline">
|
|
<msub>
|
|
<mi>Y</mi>
|
|
<mrow>
|
|
<mi>i</mi>
|
|
<mi>t</mi>
|
|
</mrow>
|
|
</msub>
|
|
</math>
|
|
is the dependent variable for beneficiary <i>i</i> in the <i>t</i>th year after <abbr class="spell">TWP</abbr> completion (<i>t </i>= 0 or 2, depending on the application);
|
|
<math display="inline">
|
|
<msub>
|
|
<mi>D</mi>
|
|
<mi>t</mi>
|
|
</msub>
|
|
</math>
|
|
is an indicator variable for the second year after <abbr class="spell">TWP</abbr> completion;
|
|
<math display="inline">
|
|
<msub>
|
|
<mi>C</mi>
|
|
<mi>i</mi>
|
|
</msub>
|
|
</math>
|
|
is an indicator for the 1998 cohort;
|
|
<math display="inline">
|
|
<msub>
|
|
<mi>X</mi>
|
|
<mi>i</mi>
|
|
</msub>
|
|
</math>
|
|
is a column vector of control baseline characteristics;
|
|
<math display="inline">
|
|
<mi>α</mi>
|
|
</math>
|
|
,
|
|
<math display="inline">
|
|
<mi>β</mi>
|
|
</math>
|
|
,
|
|
<math display="inline">
|
|
<mi>δ</mi>
|
|
</math>
|
|
,
|
|
<math display="inline">
|
|
<mi>γ</mi>
|
|
</math>
|
|
, and
|
|
<math display="inline">
|
|
<mi>π</mi>
|
|
</math>
|
|
are parameters (
|
|
<math display="inline">
|
|
<mi>π</mi>
|
|
</math>
|
|
is a column vector), and
|
|
<math display="inline">
|
|
<msub>
|
|
<mi>ε</mi>
|
|
<mrow>
|
|
<mi>i</mi>
|
|
<mi>t</mi>
|
|
</mrow>
|
|
</msub>
|
|
</math>
|
|
is an independent disturbance.</p>
|
|
<p>Three definitions are used for
|
|
<math display="inline">
|
|
<msub>
|
|
<mi>Y</mi>
|
|
<mrow>
|
|
<mi>i</mi>
|
|
<mi>t</mi>
|
|
</mrow>
|
|
</msub>
|
|
</math>
|
|
: (1) an indicator for one of five average monthly earnings categories<sup><a href="#mn5" id="mt5">5</a></sup> <span class="nobr">($0–$199;</span> <span class="nobr">$200–$499;</span> <span class="nobr">$500–$699;</span> <span class="nobr">$700–$999;</span> and $1,000 or more); (2) the dollar value of average monthly earnings; and (3) the number of <abbr class="spell">NSTW</abbr> months. The coefficient of interest is
|
|
<math display="inline">
|
|
<mi>γ</mi>
|
|
</math>
|
|
, the <abbr class="spell">DD</abbr> estimate of the difference between the mean change for the 1998 cohort from the <abbr class="spell">TWP</abbr> year to the second <span class="nobr">post-<abbr class="spell">TWP</abbr></span> year and the corresponding mean change for the 1996 cohort, adjusted for differences in baseline characteristics,
|
|
<math display="inline">
|
|
<msub>
|
|
<mi>X</mi>
|
|
<mi>i</mi>
|
|
</msub>
|
|
</math>
|
|
. The baseline characteristics include individual characteristics as of the year of <abbr class="spell">TWP</abbr> completion, plus a set of indicator variables for the calendar month of <abbr class="spell">TWP</abbr> completion. As detailed in <a href="#table2">Table 2</a>, individual characteristics include age, sex, race, educational attainment, and primary disabling condition (as determined by <abbr class="spell">SSA</abbr>).<sup><a href="#mn6" id="mt6">6</a></sup> We estimated each model by using ordinary least squares and corrected the standard errors for heteroskedasticity.<sup><a href="#mn7" id="mt7">7</a></sup></p>
|
|
<p>The model was estimated for each dependent variable (
|
|
<math display="inline">
|
|
<msub>
|
|
<mi>Y</mi>
|
|
<mrow>
|
|
<mi>i</mi>
|
|
<mi>t</mi>
|
|
</mrow>
|
|
</msub>
|
|
</math>
|
|
) using the full samples for the 1996 and 1998 <abbr class="spell">TWP</abbr> cohorts. For the five categorical average monthly earnings variables, theory predicts positive impacts on the percentage with earnings in the $500–$699 category (that is, between the old and new <abbr class="spell">SGA</abbr>) and negative impacts on the percentages in all other categories. The theoretical prediction for the impact on average monthly earnings is ambiguous in sign because of countervailing predictions for those with high and low counterfactual earnings. The theoretical prediction for the impact on the number of <abbr class="spell">NSTW</abbr> months is negative.</p>
|
|
<p>In addition to the full-sample models, we estimated models for average monthly earnings and <abbr class="spell">NSTW</abbr> months using each of four subsamples, defined by their average monthly <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings <span class="nobr">($0–$499;</span> <span class="nobr">$500–$699;</span> <span class="nobr">$700–$999;</span> and $1,000 or more) because of the expectation that the impact of the <abbr class="spell">SGA</abbr> increase on those outcomes would vary by earnings level. Those models assume that <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings are a predictor of the level of earnings in the second <span class="nobr">post-<abbr class="spell">TWP</abbr></span> year; that is, all else being equal, <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings and <span class="nobr">post-<abbr class="spell">TWP</abbr></span> earnings are positively correlated. We expect the <abbr class="spell">SGA</abbr> earnings-level increase to have the largest positive impact on the mean earnings of beneficiaries with average monthly <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings in the <span class="nobr">$0–$499</span> range and the largest negative impact on those with average monthly <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings in the $1,000 or more range. We expect the <abbr class="spell">SGA</abbr> earnings-level increase to have negative impacts on the number of <abbr class="spell">NSTW</abbr> months for all earnings categories, but especially for those with average monthly <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings of $500 or more.</p>
|
|
<p>We present the estimates from each of those models, as well as one that aggregates across the models using weights for the percentage of the 1998 cohort in each of the <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings categories. The weighted total estimate differs from the total estimate based on the full-sample regression because the percentage of the 1996 cohort in each <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings category differs from the corresponding percentage for the 1998 cohort. Thus, the weighted total estimate is an estimate of the total impact after controlling for the change in the <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings distribution from the 1996 cohort to the 1998 cohort.</p>
|
|
<p>All of the impact estimates reported are for the second year after <abbr class="spell">TWP</abbr> completion. In each case, we present unadjusted means or percentages for each cohort in the <abbr class="spell">TWP</abbr> year and the second <span class="nobr">post-<abbr class="spell">TWP</abbr></span> year, plus the regression-adjusted <abbr class="spell">DD</abbr> estimates and their t-statistics. Unadjusted <abbr class="spell">DD</abbr> estimates (not reported) can be calculated from the reported means. They differ from the regression-adjusted estimates in only minor ways (never more than in the second significant digit), implying that differences in the observable characteristics of the 1996 and 1998 cohorts did not substantially affect differences in their mean outcomes.</p>
|
|
<h3>A Test for the Effects of Confounding Factors</h3>
|
|
<p>The <abbr class="spell">DD</abbr> methodology would fail if confounding factors (that is, factors other than the <abbr class="spell">SGA</abbr> earnings-level increase) affected changes in outcomes from the <abbr class="spell">TWP</abbr> year to the second <span class="nobr">post-<abbr class="spell">TWP</abbr></span> year for the 1998 cohort relative to the corresponding changes for the 1996 cohort. Wage growth driven by external market forces is possibly an important example. If, however, the effect of wage growth on earnings from the <abbr class="spell">TWP</abbr> year to the second <span class="nobr">post-<abbr class="spell">TWP</abbr></span> year is comparable across the entire earnings range, and especially the range around the old and new <abbr class="spell">SGA</abbr> levels, the <abbr class="spell">DD</abbr> estimator will successfully control for it.</p>
|
|
<p>To test whether the <abbr class="spell">DD</abbr> estimator might produce spurious results because of wage growth or other potentially confounding factors, we compared changes in the annual earnings distribution from the <abbr class="spell">TWP</abbr> completion year with the year after <abbr class="spell">TWP</abbr> completion for the 1996 and 1997 cohorts. Neither of those cohorts experienced an increase in the <abbr class="spell">SGA</abbr> earnings level from the <abbr class="spell">TWP</abbr> year to the next year. Thus, we used the <abbr class="spell">DD</abbr> methodology to test whether "no change in the <abbr class="spell">SGA</abbr> earnings level" for the 1997 cohort had an impact on the earnings in the year after <abbr class="spell">TWP</abbr> completion; the finding of a statistically significant effect would imply that our estimation strategy is flawed.</p>
|
|
<p>The results are summarized in Table 3. The point estimates for effect of <i>no change in the <abbr class="spell">SGA</abbr> earnings level</i> on the percentage with earnings in each earnings interval in the year after <abbr class="spell">TWP</abbr> completion are small, not statistically significant, and unrelated to the level of earnings. The point estimate for the interval from <span class="nobr">$200–$499</span> is largest in magnitude <span class="nobr">(-0.2),</span> but has a t-statistic of just <span class="nobr">-0.6.</span> The point estimate in the critical range between the old and new <abbr class="spell">SGA</abbr> levels is 0.00 and has a t-statistic that is less than 0.01. This test of the <abbr class="spell">DD</abbr> estimator increases our confidence that the estimator applied to outcomes for the 1996 and 1998 cohorts in the <abbr class="spell">TWP</abbr> completion year and the second year after <abbr class="spell">TWP</abbr> completion adequately controls for the effect of wage growth and other potentially confounding factors.</p>
|
|
<div class="table" id="table3">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 3. </span><abbr class="spell">DD</abbr> estimates for the impact of "no change in the <abbr class="spell">SGA</abbr> earnings level" from the <abbr class="spell">TWP</abbr> completion year to the first post-<abbr class="spell">TWP</abbr> year for the 1996 and 1997 <abbr class="spell">TWP</abbr> completer cohorts</caption>
|
|
<colgroup span="1" style="width:8em"></colgroup>
|
|
<colgroup span="8" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th rowspan="3" class="stubHeading" id="c1">Average monthly earnings ($)</th>
|
|
<th colspan="4" class="spanner" id="c2">Percentage of cohort with earnings in category</th>
|
|
<th colspan="4" class="spanner" id="c3"><abbr class="spell">DD</abbr> estimate for the impact of the<br><abbr class="spell">SGA</abbr> earnings-level increase</th>
|
|
</tr>
|
|
<tr>
|
|
<th colspan="2" class="spanner" id="c4" headers="c2">Year of <abbr class="spell">TWP</abbr> completion</th>
|
|
<th colspan="2" class="spanner" id="c5" headers="c2">First <span class="nobr">post-<abbr class="spell">TWP</abbr></span> year</th>
|
|
<th rowspan="2" id="c6" headers="c3">Point estimate</th>
|
|
<th rowspan="2" id="c7" headers="c3">t-statistic</th>
|
|
<th colspan="2" rowspan="2" id="c8" headers="c3">95 percent confidence interval</th>
|
|
</tr>
|
|
<tr>
|
|
<th id="c9" headers="c2 c4">1996</th>
|
|
<th id="c10" headers="c2 c4">1997</th>
|
|
<th id="c11" headers="c2 c5">1996</th>
|
|
<th id="c12" headers="c2 c5">1997</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub0" id="r1" headers="c1"><span class="nobr">0–199</span></th>
|
|
<td headers="r1 c2 c4 c9">17.43</td>
|
|
<td headers="r1 c2 c4 c10">16.22</td>
|
|
<td headers="r1 c2 c5 c11">30.37</td>
|
|
<td headers="r1 c2 c5 c12">29.39</td>
|
|
<td headers="r1 c3 c6">0.22</td>
|
|
<td headers="r1 c3 c7">-0.62</td>
|
|
<td headers="r1 c3 c8">0.21</td>
|
|
<td headers="r1 c3 c8">0.23</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r2" headers="c1"><span class="nobr">200–499</span></th>
|
|
<td headers="r2 c2 c4 c9">36.58</td>
|
|
<td headers="r2 c2 c4 c10">35.74</td>
|
|
<td headers="r2 c2 c5 c11">26.89</td>
|
|
<td headers="r2 c2 c5 c12">25.80</td>
|
|
<td headers="r2 c3 c6">-0.24</td>
|
|
<td headers="r2 c3 c7">-0.64</td>
|
|
<td headers="r2 c3 c8">-0.25</td>
|
|
<td headers="r2 c3 c8">-0.23</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r3" headers="c1"><span class="nobr">500–699</span></th>
|
|
<td headers="r3 c2 c4 c9">12.38</td>
|
|
<td headers="r3 c2 c4 c10">12.46</td>
|
|
<td headers="r3 c2 c5 c11">9.18</td>
|
|
<td headers="r3 c2 c5 c12">9.27</td>
|
|
<td headers="r3 c3 c6">0.00</td>
|
|
<td headers="r3 c3 c7"><0.01</td>
|
|
<td headers="r3 c3 c8">-0.01</td>
|
|
<td headers="r3 c3 c8">0.01</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r4" headers="c1"><span class="nobr">700–999</span></th>
|
|
<td headers="r4 c2 c4 c9">10.74</td>
|
|
<td headers="r4 c2 c4 c10">10.86</td>
|
|
<td headers="r4 c2 c5 c11">8.02</td>
|
|
<td headers="r4 c2 c5 c12">8.20</td>
|
|
<td headers="r4 c3 c6">0.07</td>
|
|
<td headers="r4 c3 c7">0.30</td>
|
|
<td headers="r4 c3 c8">0.07</td>
|
|
<td headers="r4 c3 c8">0.07</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r5" headers="c1">1,000 or more</th>
|
|
<td headers="r5 c2 c4 c9">22.87</td>
|
|
<td headers="r5 c2 c4 c10">24.72</td>
|
|
<td headers="r5 c2 c5 c11">25.53</td>
|
|
<td headers="r5 c2 c5 c12">27.33</td>
|
|
<td headers="r5 c3 c6">-0.05</td>
|
|
<td headers="r5 c3 c7">-0.15</td>
|
|
<td headers="r5 c3 c8">-0.06</td>
|
|
<td headers="r5 c3 c8">-0.04</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="9">SOURCE: <abbr class="spell">SSA</abbr>'s 2007 <abbr class="spell">TRF</abbr> data merged with <abbr class="spell">MEF</abbr> data.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="9">NOTE: <abbr class="spell">DD</abbr> estimates are regression-adjusted to control for differences in the 1996 and 1997 cohorts.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<h3>Explicit Adjustment for Exogenous Wage Growth</h3>
|
|
<p>An alternative way to address the possibly confounding effects of exogenous wage growth is to explicitly adjust earnings by an index of wage growth. The <abbr class="spell">AWI</abbr> is the obvious choice, although we note that Autor and Duggan (2006) reported that wage growth in the types of relatively <span class="nobr">low-wage</span> jobs that most incoming <abbr class="spell">DI</abbr> beneficiaries have had was lower than the average wage growth during the period under study.</p>
|
|
<p>To test this approach, we applied the <abbr class="spell">DD</abbr> estimator to <abbr class="spell">AWI</abbr>-adjusted earnings for the 1996 and 1997 cohorts and repeated the test for the effect of <i>no change in the <abbr class="spell">SGA</abbr> earnings level</i>. The <abbr class="spell">AWI</abbr>-adjusted estimator failed that test. Specifically, we found a negative, marginally significant "impact" on the percentage with <abbr class="spell">AWI</abbr> earnings between $200 and $499. This strongly suggests that the application of the <abbr class="spell">DD</abbr> estimator to <abbr class="spell">AWI</abbr>-adjusted earnings for the 1996 and 1998 cohorts would lead to a negatively biased estimate of the impact of the <abbr class="spell">SGA</abbr> earnings-level increase on the percentage of the 1998 cohort with earnings in the same interval during the second year after <abbr class="spell">TWP</abbr> completion. Hence, we only report findings for the <abbr class="spell">DD</abbr> estimators applied to nominal earnings.<sup><a href="#mn8" id="mt8">8</a></sup></p>
|
|
<h2>Results</h2>
|
|
<p>The estimated impact of the $200 <abbr class="spell">SGA</abbr> increase on the distribution of earnings for the 1998 cohort in the second <span class="nobr">post-<abbr class="spell">TWP</abbr></span> year is strongly consistent with theoretical predictions (Table 4). The <abbr class="spell">DD</abbr> estimates for the percentage with monthly earnings within intervals indicate that, as expected, the <abbr class="spell">SGA</abbr>-level increase raised the percentage with earnings between $500 and $700 (that is, between the old and new <abbr class="spell">SGA</abbr>), by an amount that is very statistically significant: 2.2 percentage points (95 percent confidence interval: 1.7 to 2.7). Those additional 2.2 percentage points came partly from beneficiaries who would otherwise have had earnings below $500 (an estimated 1.0 percentage points) and partly from those who would have had earnings above $700 (an estimated 1.2 percentage points). The estimated 1.0 percentage point decline in beneficiaries who would otherwise have had earnings above $1,000 is especially notable and statistically significant. It strongly suggests that the <abbr class="spell">SGA</abbr> increase induced some beneficiaries to keep their earnings low enough to retain their benefits. Estimates for the other intervals are not statistically significant at the 5 percent level, although the point estimates are all of the expected sign. Further, by construction, the sum of the four point estimates for the two lowest and two highest intervals is equal to the negative of the estimate for the middle interval, and is statistically significant.</p>
|
|
<div class="table" id="table4">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 4. </span><abbr class="spell">DD</abbr> estimates for the impact of the 1999 <abbr class="spell">SGA</abbr> earnings-level increase on average monthly earnings from the <abbr class="spell">TWP</abbr> completion year to the second <span class="nobr">post-<abbr class="spell">TWP</abbr></span> year for the 1996 and 1998 completer cohorts</caption>
|
|
<colgroup span="1" style="width:8em"></colgroup>
|
|
<colgroup span="8" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th rowspan="3" class="stubHeading" id="c1">Average monthly earnings ($)</th>
|
|
<th colspan="4" class="spanner" id="c2">Percentage of cohort with earnings in category</th>
|
|
<th colspan="4" class="spanner" id="c3"><abbr class="spell">DD</abbr> estimate for the impact of the<br><abbr class="spell">SGA</abbr> earnings-level increase</th>
|
|
</tr>
|
|
<tr>
|
|
<th colspan="2" class="spanner" id="c4" headers="c2">Year of <abbr class="spell">TWP</abbr> completion</th>
|
|
<th colspan="2" class="spanner" id="c5" headers="c2">Second <span class="nobr">post-<abbr class="spell">TWP</abbr></span> year</th>
|
|
<th rowspan="2" id="c6" headers="c3">Point estimate</th>
|
|
<th rowspan="2" id="c7" headers="c3">t-statistic</th>
|
|
<th colspan="2" rowspan="2" id="c8" headers="c3">95 percent<br>confidence interval</th>
|
|
</tr>
|
|
<tr>
|
|
<th id="c9" headers="c2 c4">1996</th>
|
|
<th id="c10" headers="c2 c4">1998</th>
|
|
<th id="c11" headers="c2 c5">1996</th>
|
|
<th id="c12" headers="c2 c5">1998</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub0" id="r1" headers="c1"><span class="nobr">0–199</span></th>
|
|
<td headers="r1 c2 c4 c9">17.43</td>
|
|
<td headers="r1 c2 c4 c10">16.23</td>
|
|
<td headers="r1 c2 c5 c11">30.37</td>
|
|
<td headers="r1 c2 c5 c12">35.0</td>
|
|
<td headers="r1 c3 c6">-0.54</td>
|
|
<td headers="r1 c3 c7">-1.52</td>
|
|
<td headers="r1 c3 c8">-1.24</td>
|
|
<td headers="r1 c3 c8">0.16</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r2" headers="c1"><span class="nobr">200–499</span></th>
|
|
<td headers="r2 c2 c4 c9">36.58</td>
|
|
<td headers="r2 c2 c4 c10">34.02</td>
|
|
<td headers="r2 c2 c5 c11">26.89</td>
|
|
<td headers="r2 c2 c5 c12">19.32</td>
|
|
<td headers="r2 c3 c6">-0.48</td>
|
|
<td headers="r2 c3 c7">-1.31</td>
|
|
<td headers="r2 c3 c8">-1.19</td>
|
|
<td headers="r2 c3 c8">0.23</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r3" headers="c1"><span class="nobr">500–699</span></th>
|
|
<td headers="r3 c2 c4 c9">12.38</td>
|
|
<td headers="r3 c2 c4 c10">12.16</td>
|
|
<td headers="r3 c2 c5 c11">9.18</td>
|
|
<td headers="r3 c2 c5 c12">9.79</td>
|
|
<td headers="r3 c3 c6">2.20</td>
|
|
<td headers="r3 c3 c7">8.64</td>
|
|
<td headers="r3 c3 c8">1.71</td>
|
|
<td headers="r3 c3 c8">2.69</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r4" headers="c1"><span class="nobr">700–999</span></th>
|
|
<td headers="r4 c2 c4 c9">10.74</td>
|
|
<td headers="r4 c2 c4 c10">11.13</td>
|
|
<td headers="r4 c2 c5 c11">8.02</td>
|
|
<td headers="r4 c2 c5 c12">7.13</td>
|
|
<td headers="r4 c3 c6">-0.22</td>
|
|
<td headers="r4 c3 c7">-0.92</td>
|
|
<td headers="r4 c3 c8">-0.69</td>
|
|
<td headers="r4 c3 c8">0.25</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r5" headers="c1">1,000 or more</th>
|
|
<td headers="r5 c2 c4 c9">22.87</td>
|
|
<td headers="r5 c2 c4 c10">26.46</td>
|
|
<td headers="r5 c2 c5 c11">25.53</td>
|
|
<td headers="r5 c2 c5 c12">28.8</td>
|
|
<td headers="r5 c3 c6">-0.96</td>
|
|
<td headers="r5 c3 c7">-2.73</td>
|
|
<td headers="r5 c3 c8">-1.65</td>
|
|
<td headers="r5 c3 c8">-0.27</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="9">SOURCE: <abbr class="spell">SSA</abbr>'s 2007 <abbr class="spell">TRF</abbr> data merged with <abbr class="spell">MEF</abbr> data.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="9">NOTE: <abbr class="spell">DD</abbr> estimates are regression-adjusted to control for differences in the 1996 and 1998 cohorts.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<p>Turning to the results for the impact on mean earnings in the second year after <abbr class="spell">TWP</abbr> completion, we find a small and statistically insignificant positive effect of less than $4 per month (Table 5). This unweighted total estimate reflects the effects of any changes in the distribution of <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings from 1996 through 1998, which could not be caused by the <abbr class="spell">SGA</abbr> increase, and may also mask predicted countervailing impacts on the earnings of those with high and low <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings. We also show a weighted total estimate, based on <abbr class="spell">DD</abbr> estimates, for the four <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings intervals, weighted by the percent of the 1998 cohort in that interval. The weighted total estimate is somewhat larger, but still small—$10 per month—and still not statistically significant. But there are statistically significant, although small, positive impacts for the 50 percent of beneficiaries with <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings below $500. The estimated effect in that range is about $16 per month (95 percent confidence interval: $5 to $27), or 6.3 percent of average monthly earnings in that range. Point estimates for the other intervals are not statistically significant, reflecting high standard errors and wide confidence intervals within those intervals.</p>
|
|
<div class="table" id="table5">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 5. </span><abbr class="spell">DD</abbr> estimates for the impact of the 1999 <abbr class="spell">SGA</abbr> earnings-level increase on mean monthly earnings from the <abbr class="spell">TWP</abbr> completion year to the second <span class="nobr">post-<abbr class="spell">TWP</abbr></span> year, by earnings interval in the <abbr class="spell">TWP</abbr> completion year, for the 1996 and 1998 <abbr class="spell">TWP</abbr> completer cohorts</caption>
|
|
<colgroup span="1" style="width:9em"></colgroup>
|
|
<colgroup span="2" style="width:5em"></colgroup>
|
|
<colgroup span="2" style="width:5em"></colgroup>
|
|
<colgroup span="5" style="width:5em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th rowspan="2" class="stubHeading" scope="colgroup">Average monthly earnings in the <abbr class="spell">TWP</abbr> year ($)</th>
|
|
<th colspan="2" class="spanner" scope="colgroup">Percentage of cohort in category</th>
|
|
<th colspan="2" class="spanner" scope="colgroup">Change in mean monthly earnings of cohort ($)</th>
|
|
<th colspan="5" class="spanner" scope="colgroup"><abbr class="spell">DD</abbr> estimate for the impact of the<br><abbr class="spell">SGA</abbr> earnings-level increase</th>
|
|
</tr>
|
|
<tr>
|
|
<th scope="col">1996</th>
|
|
<th scope="col">1998</th>
|
|
<th scope="col">1996</th>
|
|
<th scope="col">1998</th>
|
|
<th scope="col">Point estimate</th>
|
|
<th scope="col">t-statistic</th>
|
|
<th colspan="2" scope="col">95 percent confidence interval</th>
|
|
<th scope="col">Percentage estimate</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub1" scope="row">Total</th>
|
|
<td>100.0</td>
|
|
<td>100.0</td>
|
|
<td>44.04</td>
|
|
<td>47.92</td>
|
|
<td>3.89</td>
|
|
<td>0.33</td>
|
|
<td>-18.96</td>
|
|
<td>26.74</td>
|
|
<td>0.5</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Weighted total</th>
|
|
<td>100.0</td>
|
|
<td>100.0</td>
|
|
<td>37.70</td>
|
|
<td>47.84</td>
|
|
<td>10.14</td>
|
|
<td>0.96</td>
|
|
<td>-8.94</td>
|
|
<td>29.22</td>
|
|
<td>1.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Less than 500</th>
|
|
<td>54.01</td>
|
|
<td>50.25</td>
|
|
<td>98.61</td>
|
|
<td>114.60</td>
|
|
<td>15.99</td>
|
|
<td>2.97</td>
|
|
<td>5.46</td>
|
|
<td>26.52</td>
|
|
<td>6.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row"><span class="nobr">500–699</span></th>
|
|
<td>12.38</td>
|
|
<td>12.16</td>
|
|
<td>29.28</td>
|
|
<td>46.54</td>
|
|
<td>17.25</td>
|
|
<td>1.46</td>
|
|
<td>-5.84</td>
|
|
<td>40.35</td>
|
|
<td>2.9</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row"><span class="nobr">700–999</span></th>
|
|
<td>10.74</td>
|
|
<td>11.13</td>
|
|
<td>36.29</td>
|
|
<td>54.78</td>
|
|
<td>18.49</td>
|
|
<td>1.07</td>
|
|
<td>-15.41</td>
|
|
<td>52.39</td>
|
|
<td>2.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">1,000 or more</th>
|
|
<td>22.87</td>
|
|
<td>26.46</td>
|
|
<td>-73.23</td>
|
|
<td>-80.92</td>
|
|
<td>-7.69</td>
|
|
<td>-0.19</td>
|
|
<td>-85.61</td>
|
|
<td>70.22</td>
|
|
<td>-0.3</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="10">SOURCE: <abbr class="spell">SSA</abbr>'s 2007 <abbr class="spell">TRF</abbr> data merged with <abbr class="spell">MEF</abbr> data.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="10">NOTES: The change in monthly earnings is calculated from the <abbr class="spell">TWP</abbr> completion year to 2 years later. <abbr class="spell">DD</abbr> estimates are regression-adjusted to control for differences in the 1996 and 1998 cohorts. Within each group, the percentage estimate is the <abbr class="spell">DD</abbr> estimate divided by the mean earnings in the second <span class="nobr">post-<abbr class="spell">TWP</abbr></span> year (2000) of the 1998 <abbr class="spell">TWP</abbr> completers, net of the <abbr class="spell">DD</abbr> estimate for the group.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<p>Consistent with expectations, the results show a significant negative effect of the <abbr class="spell">SGA</abbr> earnings-level increase on the number of <abbr class="spell">NSTW</abbr> months during the second year after <abbr class="spell">TWP</abbr> completion (Table 6). The weighted total <abbr class="spell">DD</abbr> estimate shows a statistically significant but small mean negative impact of 0.24 months (95 percent confidence interval: <span class="nobr">-0.30</span> to <span class="nobr">-0.18),</span> or 6.4 percent of the average number of months spent off the rolls for work by the 1998 cohort in the second year after <abbr class="spell">TWP</abbr> completion. The weighted total estimate was more than twice as large as the unweighted estimate, reflecting variation in the magnitude of the effect within <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings intervals and differences between the <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings distributions for the 1996 and 1998 cohorts. As expected, the point estimate is largest for beneficiaries with <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings in the range between the old and new <abbr class="spell">SGA</abbr> levels: <span class="nobr">-0.6 months,</span> or 17.1 percent of the months in which their counterparts in the 1998 <abbr class="spell">TWP</abbr> cohort were off the rolls in the second year after <abbr class="spell">TWP</abbr> completion. The point estimate for those with earnings under $500 in the <abbr class="spell">TWP</abbr> year is negative and half as large, but statistically significant and almost as large in percentage terms (16.2 percent). The estimate for the interval from $700 to $999 is also negative and statistically significant, but smaller still, and the estimate for the highest earnings interval is very close to zero and insignificant.</p>
|
|
<div class="table" id="table6">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 6. </span><abbr class="spell">DD</abbr> estimates for the impact of the 1999 <abbr class="spell">SGA</abbr> earnings-level increase on the number of <abbr class="spell">NSTW</abbr> months from the <abbr class="spell">TWP</abbr> completion year to the second <span class="nobr">post-<abbr class="spell">TWP</abbr></span> year, by earnings interval in the <abbr class="spell">TWP</abbr> completion year, for the 1996 and 1998 <abbr class="spell">TWP</abbr> completer cohorts</caption>
|
|
<colgroup span="1" style="width:9em"></colgroup>
|
|
<colgroup span="2" style="width:5em"></colgroup>
|
|
<colgroup span="2" style="width:5em"></colgroup>
|
|
<colgroup span="5" style="width:5em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th rowspan="2" class="stubHeading" scope="colgroup">Average monthly earnings in the <abbr class="spell">TWP</abbr> year ($)</th>
|
|
<th colspan="2" class="spanner" scope="colgroup">Percentage of cohort in category</th>
|
|
<th colspan="2" class="spanner" scope="colgroup">Change in mean number of <abbr class="spell">NSTW</abbr> months of cohort</th>
|
|
<th colspan="5" class="spanner" scope="colgroup"><abbr class="spell">DD</abbr> estimate for the impact of the<br><abbr class="spell">SGA</abbr> earnings-level increase</th>
|
|
</tr>
|
|
<tr>
|
|
<th scope="col">1996</th>
|
|
<th scope="col">1998</th>
|
|
<th scope="col">1996</th>
|
|
<th scope="col">1998</th>
|
|
<th scope="col">Point estimate</th>
|
|
<th scope="col">t-statistic</th>
|
|
<th colspan="2" scope="col">95 percent confidence interval</th>
|
|
<th scope="col">Percentage estimate</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub1" scope="row">Total</th>
|
|
<td>100.0</td>
|
|
<td>100.0</td>
|
|
<td>2.62</td>
|
|
<td>2.49</td>
|
|
<td>-0.13</td>
|
|
<td>-4.15</td>
|
|
<td>-0.19</td>
|
|
<td>-0.07</td>
|
|
<td>-3.5</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Weighted total</th>
|
|
<td>100.0</td>
|
|
<td>100.0</td>
|
|
<td>2.73</td>
|
|
<td>2.49</td>
|
|
<td>-0.24</td>
|
|
<td>-8.42</td>
|
|
<td>-0.30</td>
|
|
<td>-0.18</td>
|
|
<td>-6.4</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Less than 500</th>
|
|
<td>54.01</td>
|
|
<td>50.25</td>
|
|
<td>1.58</td>
|
|
<td>1.28</td>
|
|
<td>-0.29</td>
|
|
<td>-9.44</td>
|
|
<td>-0.36</td>
|
|
<td>-0.23</td>
|
|
<td>-16.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row"><span class="nobr">500–699</span></th>
|
|
<td>12.38</td>
|
|
<td>12.16</td>
|
|
<td>2.79</td>
|
|
<td>2.16</td>
|
|
<td>-0.63</td>
|
|
<td>-7.36</td>
|
|
<td>-0.80</td>
|
|
<td>-0.46</td>
|
|
<td>-17.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row"><span class="nobr">700–999</span></th>
|
|
<td>10.74</td>
|
|
<td>11.13</td>
|
|
<td>3.59</td>
|
|
<td>3.36</td>
|
|
<td>-0.22</td>
|
|
<td>-2.18</td>
|
|
<td>-0.43</td>
|
|
<td>-0.02</td>
|
|
<td>-4.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">1,000 or more</th>
|
|
<td>22.87</td>
|
|
<td>26.46</td>
|
|
<td>4.53</td>
|
|
<td>4.56</td>
|
|
<td>0.03</td>
|
|
<td>0.38</td>
|
|
<td>-0.11</td>
|
|
<td>0.16</td>
|
|
<td>0.4</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="10">SOURCE: <abbr class="spell">SSA</abbr>'s 2007 <abbr class="spell">TRF</abbr> data merged with <abbr class="spell">MEF</abbr> data.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="10">NOTES: The change in the <abbr class="spell">NSTW</abbr> months is calculated from the <abbr class="spell">TWP</abbr> completion year to 2 years later. <abbr class="spell">DD</abbr> estimates are regression-adjusted to control for differences in the 1996 and 1998 cohorts. Within each group, the percentage estimate is the <abbr class="spell">DD</abbr> estimate divided by the mean <abbr class="spell">NSTW</abbr> months in the second <span class="nobr">post-<abbr class="spell">TWP</abbr></span> year (2000) of the 1998 <abbr class="spell">TWP</abbr> completers, net of the <abbr class="spell">DD</abbr> estimate for the group.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<h2>Conclusion and Discussion</h2>
|
|
<p>For a number of reasons described earlier, we limit our analysis to examining the impact of the increase in the <abbr class="spell">SGA</abbr> level on earnings and number of <abbr class="spell">NSTW</abbr> months for the 1998 <abbr class="spell">TWP</abbr> completer cohort in the second year after <abbr class="spell">TWP</abbr> completion. Using our preferred estimates (based on nominal earnings), we find statistically significant impacts that are consistent with theoretical predictions: a decrease in the percentage with earnings below the old <abbr class="spell">SGA</abbr> level, a decrease in the percentage with earnings above the new level, and an increase in the percentage with earnings between the old and new levels.</p>
|
|
<p>We did not find statistically significant positive effects on mean monthly earnings, but the estimate for all beneficiaries disguises a small ($16 per month) statistically significant positive effect on mean monthly earnings for those with <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings below $500. Point estimates for other <span class="nobr"><abbr class="spell">TWP</abbr>-year</span> earnings categories are not statistically significant, reflecting high standard errors within each category. We find statistically significant negative effects on <abbr class="spell">NSTW</abbr> months; our preferred estimate is an average reduction of <span class="nobr">one-quarter</span> of a month, or 6.4 percent of our estimated number of <abbr class="spell">NSTW</abbr> months in the absence of the <abbr class="spell">SGA</abbr> earnings-level increase (that is, the estimated counterfactual). Effects are especially large for those with earnings between $500 and $699 in the <abbr class="spell">TWP</abbr> completion year: <span class="nobr">six-tenths</span> of a month, or over 17 percent of the estimated counterfactual.</p>
|
|
<p>Overall, the estimates provide strong evidence of parking, as we have defined it—intentional restraint of earnings to maintain <abbr class="spell">DI</abbr> benefits. The effect is stronger than that found in other studies, but the magnitude of the parking identified is not very large relative to the number of beneficiaries in the 1998 <abbr class="spell">TWP</abbr> cohort. We infer that between 1.2 and 2.2 percent of those beneficiaries—774 to 1,418—parked their earnings in the <span class="nobr">$500–$699</span> interval during the second year after <abbr class="spell">TWP</abbr> completion (that is, in 2000). Both bounds include the estimated 1.2 percent of beneficiaries who were induced to reduce their earnings from more than $700 to less than $700. The upper bound assumes that the estimated 1.0 percent induced to increase their earnings above $500 by the <abbr class="spell">SGA</abbr>-level increase were still restraining their earnings because of the now higher <abbr class="spell">SGA</abbr> amount, while the lower bound assumes that none of them were doing so (that is, that they would not have increased their earnings further even if the <abbr class="spell">SGA</abbr> amount was increased further).</p>
|
|
<p>Note that the percentage of beneficiaries in the 1998 cohort with earnings in the <span class="nobr">$500–$699</span> range during their second year after <abbr class="spell">TWP</abbr> completion is considerably larger than the maximum point estimate for parkers: 9.8 percent versus 2.2 percent (<a href="#table4">Table 4</a>). We do not count 7.6 percent of those beneficiaries as parkers, even under the maximum estimate, because we do not have evidence suggesting that they adjusted their earnings to keep the level below the new <abbr class="spell">SGA</abbr> earnings level. It might seem odd that some individuals would choose to have earnings in this range if it meant complete loss of benefits prior to the <abbr class="spell">SGA</abbr> earnings-level change. Several possible explanations other than simply choosing to have lower income follow: an expectation of earnings growth; high variability in earnings over the year so benefits are suspended in some months, but not others; impairment-related work expenses that are used as offsets to earnings; and less knowledge of the rules. With respect to the last explanation, some beneficiaries who engage in <abbr class="spell">SGA</abbr> later find that their benefits have been suspended or terminated retroactively and could also be asked to reimburse <abbr class="spell">SSA</abbr> for overpayments. Perhaps they would have restrained their earnings had they understood the relationship between <abbr class="spell">SGA</abbr> and benefits, but the analysis does not provide evidence on this point.</p>
|
|
<p>To be consistent with our conceptual definition of parking, we count as parkers only those in the 1998 cohort who were induced by the <span class="nobr"><abbr class="spell">SGA</abbr>-level</span> increase to earn in the range between the old and new <abbr class="spell">SGA</abbr> levels 2 years after completing their <abbr class="spell">TWP</abbr>. The total number of beneficiaries who parked below the <abbr class="spell">SGA</abbr> level in that same year, 2000, was almost certainly much larger, however, because presumably many beneficiaries from other <abbr class="spell">TWP</abbr> completer cohorts were also parked.</p>
|
|
<p>The impact estimates can be used to make back-of-the-envelope inferences about the number of parkers in the average month of any year after 1999, provided that (1) an estimate of the number of beneficiaries who were off the rolls for work in the average month of that year is available, (2) the impact of the 1999 <abbr class="spell">SGA</abbr> earnings-level increase had the same percentage impact on months with benefits suspended for work for all beneficiaries in the later years, and (3) the ratio of the upper bound number of parkers to the lower bound for the later year is the same as the ratio among the 1998 <abbr class="spell">TWP</abbr> cohort in 2000. Schimmel and Stapleton (2011) found that approximately 200,000 <abbr class="spell">DI</abbr> beneficiaries were off the rolls because of work in the average month for each year from 2002 through 2006. Based on their estimates and the estimated impacts of the 1999 <abbr class="spell">SGA</abbr> earnings-level increase on months with benefits suspended for work, we arrive at a range of 14,000 to 25,000 parkers in the typical month over this <span class="nobr">4-year</span> period.<sup><a href="#mn9" id="mt9">9</a></sup> That range is equivalent to 0.2 to 0.3 percent of the average number of beneficiaries on the rolls in December of those years. Although this number is small relative to the total number of beneficiaries, it is large relative to the percentage whose benefits are suspended because of work in a typical month (about 0.5 percent) or who are terminated in a typical year (also about 0.5 percent).<sup><a href="#mn10" id="mt10">10</a></sup></p>
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<p>There are numerous reasons why the number of parkers might be larger than our estimates indicate, even by our definition. One is the strength of the economy. Presumably, the number of parkers during the early part of the <span class="nobr">2002–2006</span> period was reduced by the weak economy. Hence, in a stronger economy, the number of parkers might be larger than those estimates suggest. Another reason is that the 1998 cohort might not have had sufficient time to fully adjust to the higher <abbr class="spell">SGA</abbr> earnings level by 2000. A third reason is that the impact of the <abbr class="spell">SGA</abbr> earnings-level increase might have been larger for those who had completed the first 36 months following their <abbr class="spell">TWP</abbr> completion than for those in the second year following <abbr class="spell">TWP</abbr> completion (that is, the period we focus on). Because the benefits of such beneficiaries are terminated if they engage in <abbr class="spell">SGA</abbr>, not just suspended, and because during this period it is was much harder to return to <abbr class="spell">DI</abbr> after termination for work than after suspension for work, their incentive to avoid engaging in <abbr class="spell">SGA</abbr> is stronger than the corresponding incentive for those who have not completed the <span class="nobr">36-month</span> <abbr class="spell">EPE</abbr>.<sup><a href="#mn11" id="mt11">11</a></sup></p>
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<p>A final reason that the number of parkers might be larger than our estimate is related to induced entry. Some workers with disabilities who have entered the <abbr class="spell">DI</abbr> program since the <abbr class="spell">SGA</abbr> earnings-level increase might not have entered if the <abbr class="spell">SGA</abbr> amount had remained the same. It is the opportunity to park at a level of earnings between the old and new <abbr class="spell">SGA</abbr> that induced such workers to enter <abbr class="spell">DI</abbr>, so it seems quite likely that many would.</p>
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<p>We do not know if the increase in the <abbr class="spell">SGA</abbr> earnings level induced any workers to enter the <abbr class="spell">DI</abbr> program. Given the length and uncertain outcome of the <abbr class="spell">DI</abbr> application process, we would not expect workers to be induced to leave their jobs and apply for benefits because of the increase in the <abbr class="spell">SGA</abbr> earnings level. Workers who have lost their jobs for other reasons (for example, during a recession) might, however, find application for <abbr class="spell">DI</abbr> a more attractive alternative because of the <abbr class="spell">SGA</abbr> increase, and some might successfully apply. "Reduced exit" might be a much a more important phenomenon than reduced entry. That is, workers who have lost their jobs for other reasons and would have entered the <abbr class="spell">DI</abbr> program even in the absence of the <abbr class="spell">SGA</abbr> increase are now less likely to leave the rolls for work than they were before the increase.</p>
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<p>It should also be noted that the increase in the level of <abbr class="spell">SGA</abbr> earnings might have increased the extent to which beneficiary earnings are reported to <abbr class="spell">SSA</abbr> (via the Internal Revenue Service). Some beneficiaries who earned above the old <abbr class="spell">SGA</abbr> level prior to 1999 might have failed to report at least some of their earnings to avoid benefit loss, but revealed more of their earnings after the <abbr class="spell">SGA</abbr> increase. To the extent that such reporting changes occurred, some beneficiaries we have counted as parkers under the new <abbr class="spell">SGA</abbr> earnings level are beneficiaries who were hiding at least some of their earnings under the old <abbr class="spell">SGA</abbr> level, and the impact on mean actual earnings is even smaller than the impact on mean reported earnings.</p>
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<p><abbr class="spell">SSA</abbr>'s use of the <abbr class="spell">AWI</abbr> to adjust the <abbr class="spell">SGA</abbr> earnings level since 2000 might have increased or reduced the number of parkers. If <abbr class="spell">AWI</abbr> growth has been more rapid than wage growth in the jobs that beneficiaries typically obtain, it would seem quite likely to have further reduced the number of beneficiaries who have their benefits suspended, and eventually terminated, for work. That does not imply that the percentage of beneficiaries who are parked is increasing, however, because some who might have restricted their earnings had the <abbr class="spell">SGA</abbr> level grown more slowly since 2000 might not do so under the current <abbr class="spell">SGA</abbr> level. Note that, by our definition, parking could be eliminated by increasing the <abbr class="spell">SGA</abbr> earnings level to a sufficiently large amount.</p>
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<p>Our findings imply that policy reforms designed to increase work incentives for <abbr class="spell">DI</abbr> beneficiaries capable of <abbr class="spell">SGA</abbr> could potentially increase the earnings of the small share of beneficiaries who are parked, but might also reduce the earnings of the even smaller share who leave the rolls because of work under current law. <abbr class="spell">SSA</abbr>'s test of the $1-for-$2 benefit offset for earnings above the <abbr class="spell">SGA</abbr> level might show increases in earnings for beneficiaries who are parked under current law, but declines for those who would have left the rolls for work.</p>
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<div id="notes">
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<h2>Notes</h2>
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<p> <a href="#mt1" id="mn1">1</a> Individuals who qualify based on their own earnings record must have worked in a Social Security–covered position for 5 of the past 10 years.</p>
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<p> <a href="#mt2" id="mn2">2</a> The <abbr class="spell">TRF</abbr> was created by Mathematica Policy Research under contract with <abbr class="spell">SSA</abbr> and is housed on <abbr class="spell">SSA</abbr>'s mainframe. <abbr class="spell">SSA</abbr> grants access to researchers to use the data on a case-by-case basis.</p>
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<p> <a href="#mt3" id="mn3">3</a> To identify blind individuals, we used a variable in the administrative records indicating the date a person was determined to be blind by <abbr class="spell">SSA</abbr> for purposes of determining <abbr class="spell">SGA</abbr>. It is possible that some of those classified as nonblind for our analysis were blind but had not been determined to be blind for <abbr class="spell">SGA</abbr> purposes. <abbr class="spell">SSA</abbr> does not determine the blind status of a beneficiary unless there is an administrative reason to do so. Determination of the <abbr class="spell">SGA</abbr> amount provides a reason for those who work, so our expectation is that there are few blind beneficiaries among the nonblind <abbr class="spell">TWP</abbr> completers.</p>
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<p class="secondpara">We considered using contemporaneous blind <abbr class="spell">TWP</abbr> completer cohorts as comparison groups for the <abbr class="spell">TWP</abbr> completer cohorts, but comparisons of earnings for the blind and nonblind cohorts prior to the increase in the nonblind <abbr class="spell">SGA</abbr> earnings level demonstrated that blind cohorts were an inadequate comparison group. We also found substantive differences in the demographic characteristics of the blind and nonblind cohorts.</p>
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<p> <a href="#mt4" id="mn4">4</a> Approximately 8 percent of each <abbr class="spell">TWP</abbr> cohort did not have earnings in the <abbr class="spell">TWP</abbr> completion year, likely a data anomaly or earnings reporting error. Approximately 15 percent did not have earnings in the year after <abbr class="spell">TWP</abbr> completion and 22 percent did not have earnings in the second year after <abbr class="spell">TWP</abbr> completion. This pattern was nearly identical in the 1997 and 1998 cohorts.</p>
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<p> <a href="#mt5" id="mn5">5</a> We initially consider earnings in these five categories when exploring changes in the distribution of earnings across the cohorts. When we consider changes in mean earnings and <abbr class="spell">NSTW</abbr> months, we collapse the lowest earnings into a single category, from $0 to $499.</p>
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<p> <a href="#mt6" id="mn6">6</a> The age variable is the actual age in the identified year. All other variables are categorical.</p>
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<p> <a href="#mt7" id="mn7">7</a> Regression results corresponding to Tables <span class="nobr">4–6</span> are available in the online version of this article (<a href="v71n4p77-appendix.html#tableA1">Appendix Tables <span class="nobr">A-1</span> through <span class="nobr">A-3</span></a>).</p>
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<p> <a href="#mt8" id="mn8">8</a> Analogous <abbr class="spell">AWI</abbr>-adjusted results to those contained in this article are available in the online version of the article (<a href="v71n4p77-appendix.html#tableA4">Appendix Tables <span class="nobr">A-4</span> through <span class="nobr">A-6</span></a>).</p>
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<p> <a href="#mt9" id="mn9">9</a> The lower bound is obtained by assuming that beneficiaries were parked only in the months represented by this impact and that the same percentage reduction applied to all beneficiaries off the rolls for work after <abbr class="spell">TWP</abbr> completion in other years. If N is the number of beneficiaries off the rolls in the typical month of year <i>t,</i> then we estimate the lower bound for the number of parkers is
|
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and the upper bound is
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.</p>
|
|
<p><a href="#mt10" id="mn10">10</a> In December 2006, the benefits of 33,613 disabled-worker beneficiaries were suspended because of work, representing 0.49 percent of all beneficiaries on the rolls in that month. During that entire year, 36,242 beneficiaries had their benefits terminated because of work, or 0.53 percent of the number of beneficiaries in December (<abbr class="spell">SSA</abbr> 2008).</p>
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<p><a href="#mt11" id="mn11">11</a> More recently, <abbr class="spell">SSA</abbr> has implemented an expedited reinstatement process for those whose benefits have been terminated for work.</p>
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</div>
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<div id="references">
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<h2>References</h2>
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|
<p>Autor, David H., and Mark G. Duggan. 2006. "The Growth in the Social Security Disability Rolls: A Fiscal Crisis Unfolding." <i>Journal of Economic Perspectives</i> 20(3): <span class="nobr">71–96</span>.</p>
|
|
<p>Census Bureau. 2009. 2008 American Community Survey. Table B18120. Accessed using American Fact Finder 8.</p>
|
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<p>Franklin, Paula A. 1976. "<a href="/policy/docs/ssb/v39n8/v39n8p20.pdf">Impact of Substantial Gainful Activity Level on Disabled Beneficiary Work Patterns</a>." <i>Social Security Bulletin</i> 39(8): <span class="nobr">20–29</span>.</p>
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<p>Franklin, Paula A., and John C. Hennessey. 1979. "<a href="/policy/docs/ssb/v42n3/v42n3p3.pdf">Effect of Substantial Gainful Activity Level on Disabled Beneficiary Work Patterns</a>." <i>Social Security Bulletin</i> 42(3): <span class="nobr">3–17</span>.</p>
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<p>[<abbr class="spell">GAO</abbr>] General Accountability Office. 2002. <i><abbr class="spell">SGA</abbr> Levels Appear to Affect the Work Behavior of Relatively Few Beneficiaries, but More Data Needed</i>. Report to the Committee on Finance, <abbr class="spell">US</abbr> Senate and the Committee on Ways and Means, House of Representatives (January).</p>
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<p>Hotchkiss, Julie L. 2004. "Growing <span class="nobr">Part-Time</span> Employment among Workers with Disabilities: Marginalization or Opportunity." Federal Reserve Bank of Atlanta, <i>Economic Review</i> (3rd Quarter): <span class="nobr">25–40</span>.</p>
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<p>Imbens, Guido, and Jeff Wooldridge. 2007. "What's New in Econometrics: Difference-in-Differences Estimation." Lecture Notes 10. Cambridge, <abbr title="Massachusetts">MA</abbr>: National Bureau of Economic Research.</p>
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<p>Liu, Su, and David C. Stapleton. 2011. "<a href="/policy/docs/ssb/v71n3/v71n3p35.html">Longitudinal Statistics on Work Activity and Use of Employment Supports for New Social Security Disability Insurance Beneficiaries</a>." <i>Social Security Bulletin</i> 71(3): <span class="nobr">35–59</span>.</p>
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<p>Schimmel, Jody, and David C. Stapleton. 2011. "<a href="/policy/docs/ssb/v71n3/v71n3p83.html">Disability Benefits Suspended or Terminated Because of Work</a>." <i>Social Security Bulletin</i> 71(3): <span class="nobr">83–103</span>.</p>
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<p>Social Security Administration. 1997. <i>Annual Statistical Supplement to the Social Security Bulletin</i>. Baltimore, <abbr title="Maryland">MD</abbr>: <abbr class="spell">SSA</abbr>.</p>
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|
<p>———. 2001. <i><a href="/policy/docs/statcomps/di_asr/2000/index.html">Annual Statistical Report on the Social Security Disability Insurance Program, 2000</a>.</i> Baltimore, <abbr title="Maryland">MD</abbr>: <abbr class="spell">SSA</abbr>.</p>
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<p>———. 2008. <i><a href="/policy/docs/statcomps/di_asr/2007/index.html">Annual Statistical Report on the Social Security Disability Insurance Program</a>, 2007</i>. Baltimore, <abbr title="Maryland">MD</abbr>: <abbr class="spell">SSA</abbr>.</p>
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<p>———. 2011. <i>The Red Book—A Guide to Work Incentives</i>. Baltimore, <abbr title="Maryland">MD</abbr>: <abbr class="spell">SSA</abbr>.</p>
|
|
<p>Social Security Advisory Board. 2009. "Disability Programs in the 21st Century: Substantial Gainful Activity." Social Security Advisory Board Issue Brief Series 1(3): April. </p>
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<p><abbr class="spell">SSA</abbr>. <i>See</i> Social Security Administration.</p>
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<p>Stapleton, David, Gina Livermore, Craig Thornton, Bonnie <span class="nobr">O'Day,</span> Robert Weathers, Krista Harrison, So <span class="nobr">O'Neil,</span> Emily Sama Martin, David Wittenburg, and Debra Wright. 2008. "Ticket to Work at the Crossroads: A Solid Foundation with an Uncertain Future." Washington, <abbr class="spell">DC</abbr>: Mathematica Policy Research.</p>
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<p>Von Wachter, Til, Jae Song, and Joyce Manchester. Forthcoming. "Trends in Employment and Earnings of Allowed and Rejected Applicants to the Social Security Disability Insurance Program." <i>American Economic Review</i>.</p>
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<p>Weathers, Robert R. <abbr title="the second">II</abbr>, and David C. Wittenburg. 2009. "Employment." In <i>Counting Working-Age People with Disabilities: What Current Data Tell Us and Options for Improvement</i>, edited by Andrew Houtenville, David C. Stapleton, Robert R. Weathers <abbr title="the second">II</abbr>, and Richard V. Burkahuser, chapter 4. Kalamazoo, <abbr title="Michigan">MI</abbr>: <abbr>W.E.</abbr> Upjohn Institute for Employment Research.</p>
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