How Disability Benefits in Early Life Affect Adult Outcomes
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Series
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Speaker(s)Manasi Deshpande (University of Chicago, United States)
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FieldEmpirical Microeconomics
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LocationTinbergen Institute Amsterdam, room 1.01
Amsterdam -
Date and time
June 06, 2023
15:30 - 16:30
Abstract
We use three sources of variation in
childhood SSI receipt to identify the effects of receiving Supplemental
Security Income (SSI) in childhood on adult outcomes and to estimate a
model of human capital development. Using a novel data linkage procedure
in Social Security Administration (SSA) data, we identify siblings of
children receiving SSI, who help to isolate the income effects of SSI
separately from potential perverse incentive effects created by the
program's rules. We find that the effects of SSI depend crucially on
parental labor supply responses: SSI has positive effects on children
when parents do not adjust their labor supply in response to SSI income,
but zero or negative effects on children when parents reduce their
earnings in response to SSI income. We estimate a model of maternal
labor supply and child human capital formation to formally decompose the
effect of SSI into channels and quantify the relative importance of
those channels. Our findings indicate that 1) the income effects of SSI
on children's human capital are substantial, while the perverse
incentive effects are relatively small, and 2) parent work on net improves children's outcomes by increasing household consumption, despite the potential decrease in parental time. Joint paper with Alessandra Voena and Jason Weitze.