revised version published as 'Dynamic programming model estimates of Social Security Disability Insurance application timing" in Journal of Applied Econometrics, 2004, 19 (6), 671-685
This paper develops dynamic structural models - an option value model and a dynamic
programming model - of the Social Security Disability Insurance (SSDI) application timing
decision. We estimate the time to application from the point at which a health condition first
begins to affect the kind or amount of work that a currently employed person can do. We use
Health and Retirement Study (HRS) and restricted access Social Security earnings data for
estimation. Based on tests of both in-sample and out-of-sample predictive accuracy, our
option value model performs better than both our dynamic programming model and our
reduced form hazard model.
We use cookies to provide you with an optimal website experience. This includes cookies that are necessary for the operation of the site as well as cookies that are only used for anonymous statistical purposes, for comfort settings or to display personalized content. You can decide for yourself which categories you want to allow. Please note that based on your settings, you may not be able to use all of the site's functions.
Cookie settings
These necessary cookies are required to activate the core functionality of the website. An opt-out from these technologies is not available.
In order to further improve our offer and our website, we collect anonymous data for statistics and analyses. With the help of these cookies we can, for example, determine the number of visitors and the effect of certain pages on our website and optimize our content.