Health, Employment, and Disability

The number of disability beneficiaries has doubled in the past two decades. It is difficult to determine how much is explained by changes in health, as we lack a counterfactual. We use undocumented immigrants to form the counterfactual, as they cannot claim benefits. Using data from the National Health Interview Survey, we show that the relationship between health and disability is stronger for the legal population than for the undocumented. Much of the difference in disability rates between the populations is due to different labor supply responses to underlying health impairments and demographic differences, rather than to differences in the impairments or demographic variables themselves.