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

Courtney Coile, Mark Duggan, Audrey Guo
2016 unpublished
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
more » ... 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. 1 Nearly one-third of American men age 55 and above are veterans of U.S. military service. In 2015, the labor force participation rate of male veterans age 55 to 64 was 10 percentage points lower than that of comparable non-veterans, 62 vs. 72 percent. This represents a significant reversal from earlier years. In 2001, for example, the participation rate of older male veterans was actually 0.4 percentage points higher than that of their nonveteran counterparts (68.2 versus 67.8 percent). 1
doi:10.3386/w23006 fatcat:swmnd25y2baiblbnelihvzwavi