Income Security Policy Paper No. 3

Modeling Application for Disability Insurance as a Retirement Decision: A Hazard Model Approach Using Choice-Based Sampling

Richard V. Burkhauser, J. S. Butler, Yang Woo Kim, and George A. Slotsve

March 1992

Abstract: This paper argues that it is useful to model the decision to apply for disability benefits as a special case of a more general dynamic retirement decision model. So doing, the authors then use a multi-state, continuous-time hazard to test the effect of policy variables on the speed at which workers apply for benefits following the onset of a work limitation. They find that policy variables matter. A higher expected replacement rate increases the risk of application. This effect is found to be significant in a small sample of the general population and in a sample, which also includes a weighted choice-based sample of disability insurance applicants.

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