Kreider, Brent

Research in Human Capital and Development: Essays in the Economics of Disability, (2000)

Using both direct and indirect information about work limitation, this paper constructs and estimates a simultaneous model of "true" work disability, applications for
federal disability benefits, and awards. Potential overreporting of work limitation by applicants is treated as a censored-sample problem. Empirical findings suggest
that the estimated sensitivity of applications to changes in benefit levels is downward biased when using a typical "uncorrected" measure of work limitation in the
estimation. The estimated sensitivity of applications to changes in award standards is also found to be downward biased when using this measure, and in this case its
use introduces more bias into the policy inferences than omitting a disability measure from the analysis altogether. Younger, unmarried, less educated, male, and
black applicants are found most likely to exaggerate work limitation.