Networks and Disability Insurance

by Delia Furtado, University of Connecticut and Nikolaos Theodoropoulos, University of Cyprus

There are large country-of-origin differences in the take-up of Social Security Disability Insurance (DI) among immigrants in the United States. Part of this variation might be explained by unobserved ethnicity-specific tendencies to become disabled or, given the progressive nature of payments, cross-group differences in labor market opportunities. This project focuses on a third factor: ethnic networks. Using data from the National Health Interview Survey (NHIS) from 1997 to 2009, we take several approaches to identifying the role of information sharing and social norms in the determination of DI take-up. In baseline estimates, we examine whether immigrants residing amidst a large number of co-ethnics are more likely to receive disability insurance when their ethnic groups have higher DI-usage tendencies. This approach allows us to include both country of origin and area fixed effects which should absorb many of the unobserved predictors of disability and economic opportunity. For further evidence of networks, we then examine whether our estimated effects are larger for people with health conditions that are difficult to clinically diagnose, such as back pain and depression. Finally, in order to distinguish between social norms and information sharing within ethnic groups as mechanisms through which networks operate, we compare the role of networks in determining the likelihood of applying for benefits to their role in determining ultimately receiving payments conditional on having ever applied. We view norms as being relatively more important for the first and information sharing more important for the latter.

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