Federal Policy and the Rise in Disability Enrollment: Evidence for the Veterans Affairsâ•Ž Disability Compensation Program

The U.S. Department of Veterans Affairs compensates 13 percent of the nation’s military veterans for service‐related disabilities through the Disability Compensation (DC) program. In 2001, a legislative change made it easier for Vietnam veterans to receive benefits for diabetes associated with military service. In this paper, we investigate this policy’s effect on DC enrollment and expenditures as well as the behavioral response of potential beneficiaries. Our findings demonstrate that the policy increased DC enrollment by 6 percentage points among Vietnam veterans and that an additional 1.7 percent experienced an increase in their DC benefits, which increased annual program expenditures by $2.85 billion in 2007. Using individual‐level data from the Veterans Supplement to the Current Population Survey, we find that the induced increase in DC enrollment had little average impact on the labor supply or health status of Vietnam veterans but did reduce labor supply among their spouses. Disciplines Other Economics | Other Education | Political Economy This journal article is available at ScholarlyCommons: http://repository.upenn.edu/hcmg_papers/130 379 [Journal of Law and Economics, vol. 53 (May 2010)] 2010 by The University of Chicago. All rights reserved. 0022-2186/2010/5302-0015$10.00 Federal Policy and the Rise in Disability Enrollment: Evidence for the Veterans Affairs’ Disability Compensation Program Mark Duggan University of Maryland Robert Rosenheck New England Mental Illness, Research, Education and Clinical Centers Perry Singleton Syracuse University