This paper analyzes the importance of policy variables in the context of Social Security
Disability Insurance (SSDI) application timing decision. Previously, we explicitly modeled the
optimal timing of SSDI application using dynamic structural models. We estimated these
models using data from the Health and Retirement Study (HRS). This paper uses option
value model estimates to simulate application timing under alternative SSDI policy
formulations. We consider changes in three policy variables: benefit levels, acceptance rates,
and employer accommodation. Our simulations suggest all these changes would have
substantial effects on expected spell lengths until application and on lifetime application
rates, and hence on SSDI caseloads.
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