NZ Centre for Political Research

Do Disability Benefits Discourage Work?

Social Security Disability Insurance (SSDI) is intended to replace lost income for people suffering from a disability that is likely to cause substantial long-term losses in earnings. A concern has been that SSDI may have a disincentive effect on the willingness of recipients to work -- that is, that some SSDI beneficiaries would work if they did not receive benefits, say Nicole Maestas and Kathleen J. Mullen of the RAND Corporation.

The authors examined SSDI applications between 2005 and 2006, focusing on a "natural experiment" that arises from the disability determination process itself: Some of the disability examiners who decide these cases are more stringent than others. This allowed Maestas and Mullen to compare work activity among similar applicants who were initially allowed or denied benefits only because their applications were randomly assigned to disability examiners with different propensities to allow benefits.

Maestas and Mullen found that those who have impairments that are on the margin of allowance for SSDI benefits are strongly discouraged from returning to work if they are awarded benefits.

They also found that those who are relatively less impaired are substantially more likely to return to work if denied benefits, whereas beneficiaries with the most severe impairments would not be any more likely to work if they had not received SSDI.

The finding highlights a major inefficiency in program operations: potentially redundant and inconsistent processing of a large fraction of applicants who are ultimately allowed to receive benefits. This kind of evidence should be useful to policymakers and taxpayers who are interested in constraining the growth of the SSDI program.

Source: Nicole Maestas and Kathleen J. Mullen, "Do Disability Benefits Discourage Work?" RAND Corporation, August 2011.
For text: http://www.rand.org/pubs/working_briefs/WB111.html

Pre-teens dream of kids and dole
IMOGEN NEALE

Lots of babies, lots of partners, lots of houses and lots of benefits. Welcome to the career dream of young boys already failing in the education system.

Alison Sutherland, who works in Wairarapa schools with children who have behavioural problems, says many of the boys she deals with – who haven't even reached their teenage years – can only see being the father of children and living with their mothers ahead.

"That is their career future," she said of youngsters who were opting out of education and employment because they saw babies as a source of income.

But coupled with the desire for children was a complete lack of understanding of what being a good parent might entail.

"There is no warmth about loving little children or wanting to be good parents. It is purely about this being a pathway to an income," the one-time principal of a youth justice facility school said.

"They have a perception that their future is to be unemployed. That is their norm. They have no sensitivity for the children – they see it as their form of income."

Sutherland said in some cases the children were merely repeating what they saw in their own homes.

"They perceive that they'll get a girl pregnant. She will be on some form of benefit and will get a house, and that they'll live with them, and that is their income.

"They live with mum, who often has a number of children and boyfriends."

Despite that gloomy outlook, Sutherland remains committed to helping her young charges and changing their perceptions.

"I'm trying to encourage the boys to be at school to learn, so they can get a job. Their reality is that the men in their lives live off mum, so they say, `Why would I get a job? I don't need one, I'll be like whoever the chap is who is living with mum at the moment'."

The sole-parent domestic purposes benefit is available to those over 18 who are not in a relationship with the other parent and do not have a partner, or who have lost their support.

The Work and Income website says the net weekly rate is $288.47, although it can be reduced if the other parent isn't legally identified.

Under 18-year-olds who are alone, caring for children and can't support themselves can apply for an Emergency Maintenance Allowance.

Late last year the Ministry of Social Development said it was difficult to estimate how many young men were fathers because their names weren't always on their children's birth certificates.

If a moral principle, e.g. theft is wrong when applied to an individual it is equally wrong when applied to the collective. The collective being just a group of individuals.

The socialists have managed to invert this principle. They claim that it is not wrong when applied to the collective. This is how the welfare state has grown.

From each according to his ability to each according to his needs. Using this principle how do you draw a line.