The paper seeks to evaluate the welfare consequences of reforming parts of the DI program by using a life-cycle framework, estimating the parameters of the model using the Panel Study of Income Dynamics (PSID), and analyzing the impact on welfare and behavior given several factors.

University of Notre Dame

In the U.S., the disability insurance program is a social welfare program that offers income and healthcare provisions for those with work-impeding disabilities.

Disability Insurance

Aim of Low and Pistaferri's Analysis

- Are claimants genuinely able to work?
- Are those most in need receiving insurance?
- How valuable is the insurance given program inefficiencies?

Key Questions of the DI Program

There were many false rejections, but also significantly few false acceptances. More false rejections can lead to greater welfare when the program is less strict (with greater coverage). Greater welfare is also associated with greater generosity and less reassessment. This leads to big impacts on the moderately-limited but also greater benefits for those most in need.

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