The federal government says it encourages people receiving federal disability payments to find jobs—but sometimes ends up discouraging them from working at all, a study has found.

People enrolled in Social Security Disability Insurance (SSDI) are allowed to earn a limited amount each month—a ceiling that is $1,350 fir 2022-- and still receive benefits. But when the Social Security Administration finds it has overpaid a recipient's benefit—perhaps because it didn't process information on their earnings or because the individual with disabilities failed to notify officials about a new job—it slaps them with a demand for repayment for what can sometimes amount to several months-worth of disability payments.

When that happens, people often reduce their hours or stop working altogether, according to a study by Mathematica, commissioned by the SSA. That would appear to work against the SSA's intention of encourage recipients to work and even eventually to exit SSDI altogether.

The researchers were testing the accuracy of some reports that notification of “work-related overpayments cause beneficiaries to take a negative view of work and to stop engaging in [work].”  They found that notices of overpayment were associated with a 3 to 4 percent drop in the number of notice recipients engaging in gainful employment.

The study is set to be published in an upcoming issue of Contemporary Economic Policy.