Working Paper: CEPR ID: DP4223
Authors: Michael Lechner; Rosalia Vazquez-Alvarez
Abstract: If labour market policies aimed at people with disabilities are effective, we should observe no significant difference in labour market outcomes between disabled and non-disabled individuals. This Paper examines the impact of disability status on labour market outcomes using matching methods associated with treatment effect techniques for programme evaluation. Such techniques are fairly robust with respect to model misspecification and account for the common support problem, thus improving the identification and estimation strategy. Using the German Socio-Economic Panel (1984-2001) we estimate the impact of disability on labour market participation and different income measures. We find that those who are not disabled experience higher employment rates and higher earnings relative to those who have become disabled. This difference is almost always significant for all labour market outcomes considered.
Keywords: causality; evaluation of disability policies; health status; labour market outcomes; matching on the propensity score; treatment effect
JEL Codes: C13; C14; I12; I18; J23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| disability (J14) | labor market outcomes (J48) |
| disability (J14) | employment rates (J68) |
| disability (J14) | earnings (J31) |
| disability (J14) | per capita disposable household income (D19) |
| disability policies (H53) | participation costs (D23) |