The Labor Supply of Disabled Veterans: 1995-2014

CRR WP 2016-8

29 Pages Posted: 31 Aug 2016

See all articles by Matthew S. Rutledge

Matthew S. Rutledge

Boston College, Center for Retirement Research

Geoffrey Sanzenbacher

Boston College Economics Department

Caroline Crawford

Boston College - Center for Retirement Research

Date Written: August 2016

Abstract

Disabled veterans are less likely to work today than in the past; between 1995 and 2014, the percent of veterans who were working while receiving disability compensation from the Department of Veterans Affairs (VA) dropped from 62 percent to 49 percent. This drop has led the VA – which liberalized the list of health conditions that qualify veterans for benefits in the early 2000s – to face the same concern as the Social Security Administration: that the proportion of individuals receiving disability income who could work, but do not, has grown. Using the Current Population Survey’s Veterans Supplement, this paper finds that employment and labor force participation rates have fallen for disabled veterans only modestly more than for non-disabled veterans. Adjusting for the rapid aging of the disabled veteran population reduces the gap in labor market activity between disabled and non-disabled veterans by 40-70 percent. Although the share of veterans with disability ratings of 50 percent or greater (indicating severe disability) has increased, the most-disabled veterans have not reduced their labor market activity – if anything, their labor supply has actually increased. The results suggest that the decline in employment and labor force participation of disabled veterans is largely a function of age and the increased prevalence of severe disability and not a changing propensity for work. This finding should alleviate concerns that the Veteran’s Administration disability system is discouraging employment any differently than in the past.

Suggested Citation

Rutledge, Matthew S. and Sanzenbacher, Geoffrey and Crawford, Caroline, The Labor Supply of Disabled Veterans: 1995-2014 (August 2016). CRR WP 2016-8. Available at SSRN: https://ssrn.com/abstract=2832158 or http://dx.doi.org/10.2139/ssrn.2832158

Matthew S. Rutledge (Contact Author)

Boston College, Center for Retirement Research ( email )

Boston, MA
United States

HOME PAGE: http://crr.bc.edu/researchers/matthew_s_rutledge.html

Geoffrey Sanzenbacher

Boston College Economics Department ( email )

United States

Caroline Crawford

Boston College - Center for Retirement Research ( email )

Boston, MA
United States

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