Increase in Full Retirement Age increases disability claims

Here’s an interesting tidbit I came across on Notes on Social Security Reform citing the University of Michigan Retirement Research Center winter newsletter:

Does the Rise in the Full Retirement Age Encourage Disability Benefits Applications?

Evidence from the HRS by Xiaoyan Li and Nicole Maestas WP 2008-198

As the Social Security full retirement age (FRA) rises, the relative generosity of Social Security retirement benefits compared to disability benefits is declining, raising the incentive for insured people to apply for disability benefits. 
We find that an average four month increase in the FRA slightly increases the two-year DI application rate by 0.04-0.30 percentage points. 
The effect is greater among those with a …

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