Economic Conditions and Supplemental Security Income Application

Supplemental Security Income (SSI) is one of the most important means-tested transfer programs in the United States. This article examines whether economic conditions affect the likelihood that jobless adults with disabilities apply for SSI payments. Using data for 1996–2010 from the Survey of Income and Program Participation linked to Social Security administrative records, we examine jobless individuals and observe state unemployment rates at both the time their unemployment spell began and the time they applied for SSI. Hazard model estimates suggest that SSI application is positively associated with an increase in the unemployment rate during an individual's jobless spell but is less likely for an individual whose jobless spell begins when the unemployment rate is comparatively high. Omitting the baseline unemployment rate from the analysis distorts the estimate of the relationship between SSI application and the contemporaneous economic conditions. Our findings suggest long-term fiscal implications for SSI of sustained high unemployment.