Who Is Screened Out? Application Costs and the Targeting of Disability Programs

We study the effect of application costs on the targeting of disability programs. We identify these effects using the closings of Social Security Administration field offices, which provide assistance with filing disability applications. Closings lead to a persistent 16 percent decline in the number of disability recipients in surrounding areas, with the largest effects for applicants with moderately severe conditions and low education levels. Disability applications fall by only 10 percent, implying that the closings reduce targeting efficiency based on current eligibility standards. Increased congestion at neighboring offices appears more important as a channel than higher travel or information costs. (JEL H55, I13, I18, J14)