POD 5 2_Evaluation Design Report Appendices_10-4-2018
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POD 5 2_Evaluation Design Report Appendices_10-4-2018
APPENDIX A SUPPLEMENT TO CHAPTER IIPOD DESIGN REPORT: APPENDIX AMATHEMATICA POLICY RESEARCHill this appendix we summarize the theoretical predictions POD 5 2_Evaluation Design Report Appendices_10-4-2018 of the POD offset on outcomes, including potential differences in outcomes for key subgroups summarized in Chapter II. We develop theoretical predictions of the effect of the new POD offset on outcomes based on a neoclassical economic model that compares the (cunent law) cash cliff for the control POD 5 2_Evaluation Design Report Appendices_10-4-2018group with the new POD offset ramp for the two treatment groups.We first focus on the predicted effects of the POD offset lilies for those beneficiariPOD 5 2_Evaluation Design Report Appendices_10-4-2018
es who are most likely to benefit from POD. whom we define as those beneficiaries who are lacing the cash cliff under current rules (that is. those whAPPENDIX A SUPPLEMENT TO CHAPTER IIPOD DESIGN REPORT: APPENDIX AMATHEMATICA POLICY RESEARCHill this appendix we summarize the theoretical predictions POD 5 2_Evaluation Design Report Appendices_10-4-2018incentive to participate in POD given the POD offset includes a new benefit adjustment process that allows some beneficiaries to keep more benefits while working and makes other changes to current lilies (e.g.. eliminating the TWP).We then consider other theoretical assumptions to show how other ben POD 5 2_Evaluation Design Report Appendices_10-4-2018eficiary subgroups might respond under POD relative to those 111 current lilies. 1 or example, those who are still within rhe TWP would always be bettPOD 5 2_Evaluation Design Report Appendices_10-4-2018
er off under current rules while in the TWP than under POD We illustrate examples of different scenarios to show changes in incentives. As noted in ChAPPENDIX A SUPPLEMENT TO CHAPTER IIPOD DESIGN REPORT: APPENDIX AMATHEMATICA POLICY RESEARCHill this appendix we summarize the theoretical predictions POD 5 2_Evaluation Design Report Appendices_10-4-2018iary responses could vary from the economic model presented for a simple. post-TWP exampleWe conclude with a summary of predicted outcomes, which matches the predictions shown in Chapter II. Because of the complexity of the cunent lilies and the heterogeneity of characteristics of the beneficiary po POD 5 2_Evaluation Design Report Appendices_10-4-2018pulation, particularly in regards to completing the TWP (or expectations aroiuid completing the TWP). predicted signs for impacts on many outcomes arePOD 5 2_Evaluation Design Report Appendices_10-4-2018
ambiguous.A. Neoclassical economic model with a POD volunteer facing the cash cliff under current rulesAs a stalling point, we show the economic inceAPPENDIX A SUPPLEMENT TO CHAPTER IIPOD DESIGN REPORT: APPENDIX AMATHEMATICA POLICY RESEARCHill this appendix we summarize the theoretical predictions POD 5 2_Evaluation Design Report Appendices_10-4-2018s. The neoclassical model show’s a labor leisure trade-off. In this trade-off. every person has a w age. w. The person chooses how to divide Ills or her lime between hours of paid work and hours not al work, termed “leisure” for simplicity, but encompassing all unpaid activities.Exhibit A.l shows be POD 5 2_Evaluation Design Report Appendices_10-4-2018neficiary budget constraints—how a beneficiary's income depends oil the number of hours the beneficiary works—under both current law and the POD offsePOD 5 2_Evaluation Design Report Appendices_10-4-2018
t. rhe exhibit illustrates the type of beneficiary likely to benefit from rhe POD offset, and therefore likely to volunteer for POD. In particular, weAPPENDIX A SUPPLEMENT TO CHAPTER IIPOD DESIGN REPORT: APPENDIX AMATHEMATICA POLICY RESEARCHill this appendix we summarize the theoretical predictions POD 5 2_Evaluation Design Report Appendices_10-4-2018as no Impairment-Related Work Expenses affecting countable earnings: and is capable of working enough hours ro make rhe POD offset more desirable relative to current law’. The budget constraints and indifference curves will vary among these potential volunteers. We start with an example exhibiting t POD 5 2_Evaluation Design Report Appendices_10-4-2018he possible positive unpacts of the POD offset on earnings and employmentA.3POD DESIGN REPORT: APPENDIX AMATHEMATICA POLICY RESEARCHoutcomes Because PPOD 5 2_Evaluation Design Report Appendices_10-4-2018
OD is voluntary. we expect beneficiaries that fall into the categories above will likely volunteer at higher rates than other volunteers, which is an APPENDIX A SUPPLEMENT TO CHAPTER IIPOD DESIGN REPORT: APPENDIX AMATHEMATICA POLICY RESEARCHill this appendix we summarize the theoretical predictions POD 5 2_Evaluation Design Report Appendices_10-4-2018 for impacts of the POD offset among volunteers. Specifically, we hold constant the mam potential effect of the eligibility termination conditions that apply to the second POD treatment gloup, but not the first, hl addition, we hold constant several other factors that might affect impacts These incl POD 5 2_Evaluation Design Report Appendices_10-4-2018ude the fixed costs of work and the so-called lumpiness of job opportunities; the effects of current work on future earnings: improvements in the funcPOD 5 2_Evaluation Design Report Appendices_10-4-2018
tioning of the administrative process for adjusting benefits, primarily due to eliminating the TWP and Grace Period; and taxes.As a starting point, weAPPENDIX A SUPPLEMENT TO CHAPTER IIPOD DESIGN REPORT: APPENDIX AMATHEMATICA POLICY RESEARCHill this appendix we summarize the theoretical predictions POD 5 2_Evaluation Design Report Appendices_10-4-2018on the y-axis To simplify the exposition, we assume the wage rate u equals 1; that is. earnings increases 1 unit for a 1 unit increase in work. If a beneficiary is not working (and thus has no earnings), the beneficiary receives his or her full SSDI benefit—point V on the vertical axis. Under curren POD 5 2_Evaluation Design Report Appendices_10-4-2018t law. income rises with earnings at a SI for SI rate until the beneficiary reaches the cash cliff. At low levels of hours worked, the SSDI benefit isPOD 5 2_Evaluation Design Report Appendices_10-4-2018
unchanged In this range, total income is the sum of earnings and the full SSDI benefit, and total income increases by u- ($1. in this simplified examAPPENDIX A SUPPLEMENT TO CHAPTER IIPOD DESIGN REPORT: APPENDIX AMATHEMATICA POLICY RESEARCHill this appendix we summarize the theoretical predictions POD 5 2_Evaluation Design Report Appendices_10-4-2018income drops to eannngs alone (from point X to point Y) The cash cliff begins at the SGA amount after the duration of the Gr ace Period For earnings above the SGA amount, total income is equal to earnings—the solid diagonal line from the light of point Y. along winch income agam increases with eannn POD 5 2_Evaluation Design Report Appendices_10-4-2018gs at a s 1 for $1 rate.Under the POD offset, income also continues to rise with earnings at SI for SI rate until a person earns up to the TWP amount,POD 5 2_Evaluation Design Report Appendices_10-4-2018
but changes after the TWP (POD tlneshold). The implication is that the current law and POD offset overlap from point V to point A After the POD thresAPPENDIX A SUPPLEMENT TO CHAPTER IIPOD DESIGN REPORT: APPENDIX AMATHEMATICA POLICY RESEARCHill this appendix we summarize the theoretical predictions POD 5 2_Evaluation Design Report Appendices_10-4-2018p to point z. This is represented by the dashed line, constituting the POD offset’s budget constraint over this range of hours worked. In this range, income increases by SI for every S2 in additional earnings, as the benefit offset reduces benefits by SI for every S2 in earnings above the TWP amount POD 5 2_Evaluation Design Report Appendices_10-4-2018 until hours reach the level corresponding to full offset, which IS point z. Thus, the POD offset eliminates the cash cliff.A.4POD DESIGN REPORT: APPEPOD 5 2_Evaluation Design Report Appendices_10-4-2018
NDIX AMATHEMATICA POLICY RESEARCHExhibit A.1. The post-TWP budget constraints and predicted choices of hypothetical non-blind SSDI-only beneficiary unAPPENDIX A SUPPLEMENT TO CHAPTER IIPOD DESIGN REPORT: APPENDIX AMATHEMATICA POLICY RESEARCHill this appendix we summarize the theoretical predictions POD 5 2_Evaluation Design Report Appendices_10-4-2018es to current law and the POD offset. Each point on the indifference Clin e depicts the combinations of hours worked income that are equally desirable for a hypothetical beneficiary. We intentionally set the fust indifference curve (IC-l) to cross the SGA earnings threshold, point X, to help show a POD 5 2_Evaluation Design Report Appendices_10-4-2018hypothetical beneficiary’s possible response wider current law and the new offset above and below the SGA earnings threshold.The budget constraint undPOD 5 2_Evaluation Design Report Appendices_10-4-2018
er current law creates a strong disincentive to work hours if the corresponding earnings are only modestly larger than the SGA because of the cash cliAPPENDIX A SUPPLEMENT TO CHAPTER IIPOD DESIGN REPORT: APPENDIX AMATHEMATICA POLICY RESEARCHill this appendix we summarize the theoretical predictions POD 5 2_Evaluation Design Report Appendices_10-4-2018r hours of work. This hypothetical beneficiar y is better off at point X than at any other point on the budget constraint under current law. The preferences of this beneficiary are such that, under current law. he or she would not choose to earn more than the SGA amount. Neoclassical theory allows f POD 5 2_Evaluation Design Report Appendices_10-4-2018or beneficiaries who .are willing to give up their benefits for work under current law; for such a beneficiary, the indifference curves would lie flatPOD 5 2_Evaluation Design Report Appendices_10-4-2018
ter, indicating a greater willingness to trade off leisure for higher income.The POD offset creates new incentives for the hypothetical beneficiary shAPPENDIX A SUPPLEMENT TO CHAPTER IIPOD DESIGN REPORT: APPENDIX AMATHEMATICA POLICY RESEARCHill this appendix we summarize the theoretical predictions POD 5 2_Evaluation Design Report Appendices_10-4-2018ew indifference curve. IC-2. IC-2 is to the left of IC-l. with higher income for any given level of hours worked. This implies that the beneficiary' prefers all points on IC-2 to IC-l In other words, any point on IC-2 makes the beneficiary better off relative to IC-lIn summary, the beneficiary depic POD 5 2_Evaluation Design Report Appendices_10-4-2018ted 111 the graph IS always better off under POD given the move to a higher indifference curve, which results in positive employment increases and redPOD 5 2_Evaluation Design Report Appendices_10-4-2018
uctions in benefits, specifically, because this hypothetical beneficiary can now choose hours corresponding to point B on IC-2. he or she would chooseGọi ngay
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