Economic Opportunity Reduces Disability

Add upward mobility – an individual’s success in surpassing parents’ economic circumstances – to the factors that can keep federal disability payments in check.

A substantial body of academic research has already established that when the economy is growing, unemployed and marginally employed people have better luck on the job market, and their applications for disability insurance start to decline.

But booms and busts aren’t the only influence on disability. A new study finds that economic conditions of a different type – the ability of low-income people to move up the economic ladder – can reduce disability by improving their health. People who earn more money tend to be healthier for a variety of reasons, ranging from access to better medical care to the lower rates of depression and obesity that exist in higher-income populations.

In a recent study, Yale University sociologist Rourke O’Brien used the data from another researcher’s study that mined IRS tax records to find people born in the 1980s to parents whose incomes were at the lower end – the 25th percentile – of the U.S. income distribution. The children were followed into adulthood to see if they earn more or less than their parents did.

It’s very difficult for children in low-income families to improve on their parent’s circumstances, but the odds are better if they grow up in areas with better schools, less inequality, and more two-parent families.

O’Brien’s research found that counties in which young adults earn more, on average, than their parents were less likely to one day report having a disability in U.S. Census surveys and less likely to be receiving disability benefits.

In a more in-depth analysis, the researcher found some evidence that upward mobility also blunts the well-known tendency of rising unemployment to increase disability applications.

Taken together, the findings indicate that whether someone ends up on disability benefits depends, at least in part, on where they grew up.

To read this study, authored by Rourke O’Brien, see “Economic Opportunity and Spatial Variation in Self-reported Disability and Receipt of SSI and SSDI.”

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.