The Prospect of Losing Benefits and the Work Decisions of Participants in Disability Programs

Participants in public disability programs face the loss of benefits if they work and earn at substantial levels. Policy makers, researchers, and advocates have suggested that the prospect of benefit loss is, at least in part, an explanation for the low levels of earnings and work participation among disability program participants; however, research on the actual effects is very limited. The authors estimate the prospect of benefit loss effects on work participation and earnings of participants in four disability programs using a unique survey. The findings strongly suggest that the prospect of benefit loss decreases earnings and work participation among disability program participants. Unexpectedly, the authors found little variation in the size of the prospect of benefit loss effects across programs even though there is substantial cross-program variation in the actual benefit loss that occurs with work participation and increased earnings.