Can changes in disability insurance work incentives influence beneficiary employment? Evidence from the promoting opportunity demonstration

Abstract

We study how disability beneficiary work behavior responds to a rule change that replaces a cash cliff—a threshold above which benefits reduce to zero—with a benefit offset ramp—where benefits are gradually phased out. Using a randomized controlled trial with over 10,000 Social Security Disability Insurance beneficiaries who voluntarily enrolled in the demonstration, we find precisely estimated null effects on earnings, income, and benefit amounts. An analysis of mechanisms indicates that administrative burden, the limited size of the incentive, and individual and systemic barriers to employment for people with disabilities likely contributed to the limited impacts.