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  3. American Economic Journal: Applied Economics
  4. July 2016
  5. The Impact of Disability Benefits on Labor Supply: Evidence from the VA's Disability Compensation Program

The Impact of Disability Benefits on Labor Supply: Evidence from the VA's Disability Compensation Program

  • David H. Autor
  • Mark Duggan
  • Kyle Greenberg
  • David S. Lyle
American Economic Journal: Applied Economics
vol. 8, no. 3, July 2016
(pp. 31-68)
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Abstract

Combining administrative data from the US Army, Department of Veterans Affairs, and Social Security Administration, we analyze the effect of the VA's Disability Compensation (DC) program on veterans' labor force participation and earnings. We study the 2001 Agent Orange decision, a unique policy change that expanded DC eligibility for Vietnam veterans who served in theater but did not expand eligibility to other veterans of this era, to assess the causal effects of DC enrollment. We estimate that benefits receipt reduced veterans' labor force participation by 18 percentage points, though measured income net of transfer income rose on average.

Citation

Autor, David H., Mark Duggan, Kyle Greenberg, and David S. Lyle. 2016. "The Impact of Disability Benefits on Labor Supply: Evidence from the VA's Disability Compensation Program." American Economic Journal: Applied Economics, 8 (3): 31-68. DOI: 10.1257/app.20150158

Additional Materials

JEL Classification

  • H51 National Government Expenditures and Health
  • I12 Health Behavior
  • I18 Health: Government Policy; Regulation; Public Health
  • J14 Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
  • J22 Time Allocation and Labor Supply
  • J28 Safety; Job Satisfaction; Related Public Policy
  • J31 Wage Level and Structure; Wage Differentials
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