Vocational Rehabilitation on the Road to Social Security Disability: Longitudinal Statistics from Matched Administrative Data

Abstract

Vocational rehabilitation (VR) agencies can potentially help disability-insured workers stay at work or return to work when they experience the onset of a disabling physical or mental condition. Such assistance could prevent or delay their exit from the labor force and entry into the Social Security disability (SSD) rolls. This study presents new descriptive information on the extent to which VR applicants receive SSD benefits before or after VR application. The analyses show that substantial numbers of VR applicants entered SSD in the 60 months following VR application -- more than 50,000 (11.3 percent) of the first-time VR applicants in 2003. SSD entry varies with VR applicant characteristics; those with relatively high SSD entry include non-Hispanic whites, those not employed at application, those with more than a high school education, and especially those already in SSI but not SSD. There is also wide variation in SSD entry across states, with some states having entry percentages twice as high as others. We also found a positive relationship between our measure of wait time and entry into SSD, and we discuss strategies to estimate the causal effect of wait time on SSD entry -- an effect that could theoretically be in either direction. Although the large number of VR applicants entering SSD after VR application is modest compared to the number receiving an SSD award each year, the impact that VR services have on later SSD and Medicare expenditures could be in the billions of dollars annually, in either direction.

Keywords: vocational rehabilitation, disability insurance, Social Security, Medicare, labor force participation