The effect of disability insurance receipt on labor supply

This paper estimates the effect of the Disability Insurance program on labor supply. We find that 30% of denied applicants and 15% of allowed applicants work several years after a disability determination decision. The earnings elasticity with respect to the after tax wage is 0.8. However, the labor supply of those over age 55, college graduates, and those with mental illness is not sensitive to allowance of benefits.Disability insurance ; Labor supply

The Labor Supply Effects of Disability Insurance: Evidence from Automatic Conversion Using Administrative Data

We analyze a natural experiment generated by the interaction of the Social Security DI and OA programs at Full Retirement Age, when DI beneficiaries are automatically converted from the DI program to the OA retired worker program. At conversion benefit payments continue unchanged, however the DI program’s high implicit marginal tax rate on earnings is abruptly relaxed. We use administrative Social Security data for the universe of primary worker DI beneficiaries from the 1934-1942 birth cohorts observed in panel over the period of 1995-2008. Our estimates imply that the DI program depresses labor supply among even the oldest DI beneficiaries. In the context of the literature to date that has sought to establish an upper bound on the earnings losses caused by the presence of the DI program by using quasi-experimental variation occurring at the program entry margin, our use of quasi-experimental variation arising from the program exit margin, when individuals are already in their mid-60s and the dominant trend in labor force participation in the population at large is downward, suggests that our estimates are most appropriately viewed as a lower bound estimate of the residual work capacity of all beneficiaries.

Stylized Facts and Incentive Effects Related to Claiming of Retirement Benefits Based on Social Security Administration Data

We rely on the Master Beneficiary File to document a number of facts regarding claiming of Social Security benefits and quality of date of birth data in administrative files. We then assess the impact of changes in retirement incentives that have taken place since 2000 on claiming. We find evidence of non-trivial misreporting or clerical errors in the dates of births that give rise to systematic patterns but nevertheless appear to be fairly random. We also confirm significant tendency to claim in January or on birthdays, but we find that these patterns are still sensitive to incentive effects. Relying on the discontinuity in the Early Entitlement Age that occurs for people born on the second day of any month, we find evidence that people do not have singlepeaked preferences over claiming age: relaxing the early retirement constraint leads to acceleration of retirement by some people for whom the constraint would not be otherwise binding. One possible explanation for this pattern is a preference for retiring at one's birthday. We take advantage of a change in the full retirement age and find that there remains unusually large (relative to other birthdays) number of people who claim around their 65th birthday, supporting the idea that Medicare eligibility has an impact on claiming retirement benefits. Finally, we confirm that elimination of the earnings test in 2000 for those above full retirement age accelerated retirements and find that it also led to a significant weakening of the January effect in that group, bolstering the idea that the January effect is sensitive to economic incentives.

On the bridge number of knot diagrams with minimal crossings

Given a diagram $D$ of a knot $K$, we consider the number $c(D)$ of crossings and the number $b(D)$ of overpasses of $D$. We show that, if $D$ is a diagram of a nontrivial knot $K$ whose number $c(D)$ of crossings is minimal, then $1+\sqrt{1+c(D)} \leq b(D)\leq c(D)$. These inequalities are shape in the sense that the upper bound of $b(D)$ is achieved by alternating knots and the lower bound of $b(D)$ is achieved by torus knots. The second inequality becomes an equality only when the knot is an alternating knot. We prove that the first inequality becomes an equality only when the knot is a torus knot.Comment: 18 pages, 7 figure

Testing for a General Class of Functional Inequalities

In this paper, we propose a general method for testing inequality restrictions on nonparametric functions. Our framework includes many nonparametric testing problems in a unified framework, with a number of possible applications in auction models, game theoretic models, wage inequality, and revealed preferences. Our test involves a one-sided version of $L_{p}$ functionals of kernel-type estimators $(1\leq p <\infty )$ and is easy to implement in general, mainly due to its recourse to the bootstrap method. The bootstrap procedure is based on nonparametric bootstrap applied to kernel-based test statistics, with estimated "contact sets." We provide regularity conditions under which the bootstrap test is asymptotically valid uniformly over a large class of distributions, including the cases that the limiting distribution of the test statistic is degenerate. Our bootstrap test is shown to exhibit good power properties in Monte Carlo experiments, and we provide a general form of the local power function. As an illustration, we consider testing implications from auction theory, provide primitive conditions for our test, and demonstrate its usefulness by applying our test to real data. We supplement this example with the second empirical illustration in the context of wage inequality.Comment: 128 page