The impact of temporary assistance programs on disability rolls and re-employment

Abstract

Workers who lose their job draw from temporary assistance programs in order to buffer their income losses. They are also more likely to apply for Disability Insurance (DI) and Supplemental Security Income (SSI). Whether participating in temporary assistance programs influences the application decision for DI and SSI, however, is largely unknown. We address this question using panels from the Survey of Income and Program Participation (SIPP) matched to administrative records on DI and SSI applications. We distinguish between four temporary insurance programs: Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), Unemployment Insurance (UI), and Temporary Disability Insurance programs (TDI). For each of these programs, we construct instruments based on state policies in order to address endogeneity concerns. Our results indicate that workers select into temporary assistance and disability programs by income and health status. When controlling for selection bias, we find evidence that increased access to UI benefits reduces applications for DI, while increased access to SNAP benefits increases applications for SSI. These results suggests that (i) applications for DI and SSI are sensitive to participation in temporary assistance programs; (ii) the strength of the net effect depends on the overlap between target populations; and (iii) the direction of the net effect depends on benefit levels or on institutional and population characteristics.