Characteristics or Incentives: Why Do Employment Outcomes for the SSA Beneficiary Clients of VR Agencies Differ, on Average, from Those of Other Clients?

Abstract

This report uses data from the Longitudinal Study of Vocational Rehabilitation Services Programs to compare employment outcomes of state vocational rehabilitation (VR) agency clients who receive Social Security Disability Insurance (DI) or Supplemental Security Income (SSI) -- “beneficiary clients” -- to those of non-beneficiary clients, before and after controlling for detailed information on disability and other characteristics that are likely to affect outcomes. Differences are substantial. Characteristics do explain a substantial share of the differences, but substantial differences remain. For instance, we estimate that only 23 percent of beneficiaries who received services achieved earnings above $500 per month for at least 9 months out of a 15-month period, compared to 54 percent of non-beneficiaries – a 30 percentage point difference. After controlling for other characteristics, the difference is 17 percentage points. One likely explanation for a substantial portion of the remaining difference is work disincentives faced by beneficiary clients. During this period, SSI recipients lost 50 cents in benefits for every dollar earned above certain disregards, and SSDI beneficiaries lost all benefits if they earned more than$500 per month, again net of certain disregards, for more than nine months