Do Stronger Employment Discrimination Protections Decrease Reliance on Social Security Disability Insurance? Evidence from the Social Security Reforms

by Patrick Button and Mashfiqur R. Khan, Tulane University

The Social Security Amendments of 1983 increased the full retirement age (FRA) and increased penalties for retiring before the FRA. As intended, this cut to retirement benefits pushed older workers into the labor market or kept them in jobs for longer. However, it also caused spillovers to Social Security Disability Insurance (SSDI) applications and receipt by making SSDI relatively more generous. We explore if state-level disability and age discrimination laws that are stronger or broader than the federal laws moderated these spillovers. These stronger and broader laws could have increased hiring, employment, or reduced labor force exit such that spillovers to SSDI were less frequent. Alternatively, these laws could have caused decreased hiring as discrimination protections increase hiring costs to employers, making employers less likely to want to hire older workers. If this occurs, it makes it more difficult for older workers to delay retirement through the common practice of taking “bridge” or “partial retirement” jobs.

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