I am an assistant professor of economics at the Kenneth C. Griffin Department of Economics, University of Chicago.
My research areas are empirical public finance and labor economics, with a focus on the effects of social insurance and public assistance programs and their interaction with labor markets.
Curriculum Vitae (pdf)
Office: Saieh Hall for Economics 347
Email: mdeshpande [at] uchicago.edu
Department of Economics
University of Chicago
1126 E. 59th Street
Chicago, IL 60637
Publications and Working Papers
"Beyond Health: Non-Health Risk and the Value of Disability Insurance" (with Lee M. Lockwood)
[January 2021, Draft under SSA review but available upon request]
Abstract: The public debate over disability insurance (DI) has centered on concerns about individuals with less-severe health conditions receiving benefits. We go beyond health risk alone to quantify DI's overall insurance value, including value from insuring non-health risk. We find that DI recipients, especially those with less-severe health conditions, are much more likely to have experienced a wide variety of non-health shocks than non-recipients. Selection into DI on the basis of non-health shocks is so strong among individuals with less-severe health conditions that by many measures less-severe DI recipients are worse off than severe DI recipients. As a result, under baseline assumptions, DI benefits to less-severe recipients have an annual value (insurance benefit less efficiency cost) of $7,700 per recipient, about three-fourths that of DI benefits to severe recipients ($9,900). Insurance against non-health risk accounts for about one-half of DI's value.
[December 2020, NBER RDRC Working Paper]
Abstract: The debate over the Supplemental Security Income program for children reflects a key tradeoff in welfare programs: transfers to disadvantaged households could promote children's human capital development by increasing household resources, but conditioning those transfers on child health and family income could potentially discourage human capital development by creating perverse incentives. In this paper, I use two regression discontinuity designs (RDD) paired with Social Security administrative data to estimate the net effect of receiving SSI in childhood on adult earnings and to separately identify the household resources channel and perverse incentives channels. Using the first RDD, I find that removing children from SSI has a statistically insignificant net effect on child earnings in adulthood. Using the second RDD and a novel data linkage procedure to identify younger siblings in SSA administrative data, I find that removing youth from SSI at the age of 18 reduces the adult earnings of their younger siblings by about $5,000 annually. This finding suggests that SSI's household resources channel has a large positive effect on children's human capital development. I develop a decomposition procedure to determine the relative contributions of the income transfer and the perverse incentives channels to the net effect of SSI.
"Disability and Distress: The Effect of Disability Programs on Financial Outcomes" (with Tal Gross and Yalun Su)
[November 2019, Forthcoming in American Economic Journal: Applied]
Abstract: We provide the first evidence on the relationship between disability programs and markers of financial distress: bankruptcy, foreclosure, eviction, and home sale. Rates of these adverse financial events peak around the time of disability application. Using variation induced by an age-based eligibility rule, we find that disability allowance reduces the likelihood of bankruptcy (0.77 percentage point or 31 percent), foreclosure (1.8 percentage point or 34 percent), and home sale (1.8 percentage point or 15 percent). We present evidence that these changes reflect true reductions in financial distress. Considering these extreme events increases the optimal disability benefit amount and suggests a shorter optimal waiting time.
American Economic Journal: Economic Policy 11(4), November 2019, pp. 213-48
Winner of 2020 AEJ: Economic Policy Best Paper Award
Abstract: We study the effect of application costs on the targeting of disability programs using the closings of Social Security Administration field offices, which provide assistance with filing disability applications. We find that field office closings lead to large and persistent reductions in the number of disability recipients and reduce targeting efficiency based on current eligibility standards. The number of disability recipients declines by 16% in surrounding areas, with the largest effects for applicants with moderately severe conditions and low education levels. Evidence on channels suggests that increased congestion at neighboring offices is more important than higher travel or information costs.
American Economic Review 106(11), November 2016, pp. 3300-3330
Winner of 2015 APPAM Dissertation Award, 2015 Upjohn Institute Dissertation Award, and 2016 NASI John Heinz Dissertation Award
Abstract: I estimate the effects of removing low-income youth with disabilities from Supplemental Security Income (SSI) on their earnings and income in adulthood. Using a regression discontinuity design based on a 1996 policy change in age 18 medical reviews, I find that youth who are removed from SSI at age 18 recover one-third of the lost SSI cash income in earnings. SSI youth who are removed and stay off SSI earn on average $4,400 annually, and they lose $76,000 in present discounted observed income over the 16 years following removal relative to those who do not receive a review.
Review of Economics and Statistics 98(4), October 2016, pp. 638-654
Abstract: I estimate the effect of removing children with disabilities from Supplemental Security Income (SSI) on parents earnings and household disability receipt. Using administrative data from the Social Security Administration, I implement regression discontinuity and difference-in-differences designs based on changes in the budget for child medical reviews. I find that parents fully offset the SSI loss with increased earnings, and the loss of the child's SSI payment reduces disability applications by parents and siblings. I model and test alternative hypotheses for the large parental earnings response and find suggestive evidence that the response is driven primarily by an income effect.
Research in Progress
"How Do Expectations about Government Benefits Affect Human Capital Investment?" (with Rebecca Dizon-Ross)
"The Effects and Channels of Early-Life Removal from Disability Insurance: Evidence from Supplemental Security Income Children" (with Alessandra Voena and Jason Weitze)