Productive efficiency in processing social security disability claims: a look back at the 1989–95 surge

Using panel data from a relatively volatile time period 1988–95, we have identified factors that account for over 80% of the longitudinal variation in the processing time of disability applications. Pending claims, workloads, percentage of SSI applications (children and adults), and the proportion of cases considered at different stages of the disability determination process explain a significant part of the variation. We found strong evidence that observed gains in organizational productivity were attained at the cost of timeliness in case dispositions. The dynamic panel data model estimated in this paper is used to compare the productive efficiency of different disability offices in a general econometric framework in which claim forecasts, staff allocations, and the number of adjudications are treated as endogenous. Our analysis suggests that there are persistent differences in the average processing time between states that can be attributed to organizational inefficiency. The importance of good forecasts of disability applications at sub-national levels is emphasized.