Benefit Generosity, Take-up, and Behavioral Responses: Evidence from SSI

Riley Wilson, Brigham Young University

Since 2010, there has been a steady, precipitous drop in Supplemental Security Income (SSI) applications. Thus far, we have little understanding of how changes in eligibility or changes in take-up contribute to this decline. One reason we know so little is because the federal standardization of SSI provides little exogenous variation to test how various factors affect the SSI application decision. In this research, I propose to examine one relevant factor that could influence both eligibility and take-up: benefit generosity. Many states offer supplemental benefits to federal SSI recipients. These additional payments vary across states, can sometimes be large (approaching 30 percent of the federal maximum), and have changed from time to time. Using a border discontinuity design, I propose to exploit these SSI state supplements and compare application rates between neighboring zip codes that face different maximum SSI benefits (federal + state) when the state supplements change. Using administrative data on zip code applications and awards, I can identify how responsive both applications and awards are to SSI generosity, and also explore heterogeneity across age and primary disability diagnosis. I will combine this with Census data to explore potential behavioral responses, such as labor supply decisions and welfare migration. This analysis will shed light on how SSI generosity affects both the eligibility and take-up margin and help unpack the black box of the SSI application decision. Based on these patterns, I can then observe how the relative importance of benefit generosity has changed over time, and document to what extent this has contributed to the aggregate decline in applications since 2010. This will shed light on both the decline in SSI applications and SSI take-up.