Review of Economics and Statistics
Why Does Disability Insurance Enrollment Increase During Recessions? Evidence from Medicare
2026-02-04
Social Security Disability Insurance (DI) awards rise in recessions, especially for workers over age 50. We use Medicare data to investigate how health, entry costs, and age-based DI eligibility rules shape this pattern. Entrants induced by recessions have lower medical spending and mortality than typical recipients. Entry responses to unemployment jump two- to fourfold at ages 50 and 55, when eligibility rules relax. Using these age-based discontinuities as instruments, we find no shift in marginal entrants' health across unemployment levels. These findings show that DI's age-based eligibility rules are a primary driver of cyclical entry, while health shocks are not.