The Long-Run Impact of Temporary Disability Insurance on Social Security Disability Claims, Earnings Stability, and Labor Force Participation

Emily Wiemers , University of Massachusetts Boston
Randy Albelda, University of Massachusetts Boston
Michael Carr, University of Massachusetts Boston

Workers facing illness or injury often require time off work to recover before returning to work. But only five states provide temporary paid medical leave for workers through Temporary Disability Insurance (TDI) programs. Workers face both short- and long-run employment consequences of adverse health conditions and disability including increased likelihood of job loss, declines in work hours, and reductions in earnings and consumption. And, the inability to recover from a temporary work limiting disability may increase the use of SSDI. This paper uses state-level TDI availability to answer the following questions; does the availability of TDI affect long-run earnings, labor force participation, or employment instability for those with a work-limiting disability?, do TDI programs reduce SSDI claims for these individuals?, and, are there groups of workers by education, earnings, gender, or race for whom TDI is particularly useful in reducing SSDI claims and improving ong-run earnings and labor force participation?

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 Presented in Session 8. Economy, Labor Force, Education, & Inequality