The large growth in disability transfer program beneficiaries and expenditures from
1965-1978 and the sizable decrease in older male labor force participation has led to
public concern about both the incentive effects of and the budgetary expenditures for
these programs. The Reagan administration has discussed two paths toward reducing
disability benefit expenditures: removing individuals from the rolls via administrative
review and reducing the generosity of benefits. These two alternative retrenchment
strategies are explored in terms of both the number of beneficiaries expected to
voluntarily remove themselves from the rolls if benefits are reduced and the expected
economic hardships if individuals are administratively removed. Existing econometric
choice modeling underlies the estimates.
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