To Work for Yourself, for Others, or Not at All? How Disability Benefits Affect the Employment Decisions of Older Veterans

53 Pages Posted: 3 Jan 2017 Last revised: 30 Jan 2017

See all articles by Courtney Coile

Courtney Coile

Wellesley College; National Bureau of Economic Research (NBER)

Mark Duggan

Stanford University - Department of Economics

Audrey Guo

Stanford University

Date Written: December 2016

Abstract

The U.S. Department of Veterans Affairs Disability Compensation (DC) program provides disability benefits to nearly one in five military veterans in the US and its annual expenditures exceed $60 billion. We examine how the receipt of DC benefits affects the employment decisions of older veterans. We make use of variation in program eligibility resulting from a 2001 policy change that increased access to the program for Vietnam veterans who served with “boots on the ground” in the Vietnam theater but not for other veterans of that same era. We find that the policy-induced increase in program enrollment decreased labor force participation and induced a substantially larger switch from wage employment to self-employment. This latter finding suggests that an exogenous increase in income spurred many older veterans to start their own businesses. Additionally, we estimate that one in four veterans who entered the DC program due to this policy change left the labor force, estimates in the same range as those from recent studies of the Social Security Disability Insurance (SSDI) program.

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Suggested Citation

Coile, Courtney and Duggan, Mark and Guo, Audrey, To Work for Yourself, for Others, or Not at All? How Disability Benefits Affect the Employment Decisions of Older Veterans (December 2016). NBER Working Paper No. w23006. Available at SSRN: https://ssrn.com/abstract=2892430

Courtney Coile (Contact Author)

Wellesley College ( email )

106 Central Street
Wellesley, MA 02181
United States
781-283-2408 (Phone)
781-283-2177 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Mark Duggan

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States

Audrey Guo

Stanford University ( email )

Stanford, CA 94305
United States

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