Health Consequences of a Changing Economy

Economy and Disability: Labor Market Conditions and the Disability of Working-Age Individuals

Abstract

Previous work on the link between macroeconomic conditions and disability has focused almost exclusively on changes in applications for disability benefit programs, not changes in individuals’ self-perceived disability status. This article demonstrates that macroeconomic conditions may influence disability through a direct disabling pathway that is distinct from the reservation wage pathway highlighted in previous analyses of disability assistance. State-level analyses using data from the Current Population Survey (CPS) from 1982–2006 reveal a robust inverse relationship between state GDP per capita and disability among the working-age population. Analyses using individual-level data from the 2008 American Community Survey (ACS) find that currently employed persons are more likely to report a disability if they reside in a local area with higher unemployment rates and that this association exists across levels of education; and finally, a lagged regression model analyzing change in local unemployment from 2008 to 2009, the first year of the “Great Recession,” finds that an increase in local area unemployment in one year is associated with an increased self-reported disability rate among currently employed workers in the next year. Findings have implications for understanding how macroeconomic downturns influence perceptions of disability and how structural conditions shape individual identity more broadly.