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The Longitudinal Structure of Earnings Losses among Work-Limited Disabled Workers

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  • Kerwin Kofi Charles
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    Abstract

    This paper asks: What are the dynamic effects of disability on earnings? Unlike most of the previous literature, it uses panel data, and fixed effects methods are used to assess how the earnings of disabled workers depart from expected levels over many years before and after the date of onset of their disability. The paper also examines how worker characteristics affect earnings losses from disability, with particular attention paid to the age at which the person suffers onset. Disabled men are found to experience sharp drops in earnings that predate the measured date of onset. Earnings recover rapidly soon after onset, with much of the immediate reduction made up in the first two post-onset years. A modest downward trend follows, resulting in significant long-term losses in expected annual earnings of about 12 percent per year. Being older at onset, nonwhite, more chronically disabled, and less educated cause the losses from disability to be larger and the recovery smaller. A large portion of these differences across groups appear to derive from industry affiliation after onset. The Paper argues the facts are all consistent with a simple human capital explanation of the disability process.

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    Bibliographic Info

    Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

    Volume (Year): 38 (2003)
    Issue (Month): 3 ()
    Pages:

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    Handle: RePEc:uwp:jhriss:v:38:y:2003:i:3:p618-646

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    Web page: http://jhr.uwpress.org/

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    Cited by:
    1. Bruce D. Meyer & Wallace K. C. Mok, 2006. "Disability, Earnings, Income and Consumption," Working Papers, Harris School of Public Policy Studies, University of Chicago 0610, Harris School of Public Policy Studies, University of Chicago.
    2. David R. Mann & David C. Wittenburg, 2014. "Explaining Differentials in Employment and Wages Between Young Adults with and Without Disabilities," Mathematica Policy Research Reports, Mathematica Policy Research 8112, Mathematica Policy Research.
    3. Anne Moller Dano, 2005. "Road injuries and long-run effects on income and employment," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 14(9), pages 955-970.
    4. Gallipoli, Giovanni & Turner, Laura, 2009. "Household Responses to Individual Shocks: Disability and Labour Supply," CLSSRN working papers, Vancouver School of Economics clsrn_admin-2009-32, Vancouver School of Economics, revised 22 Jun 2009.
    5. Owen O'Donnell & Eddy Van Doorslaer & Tom Van Ourti, 2013. "Health and Inequality," Tinbergen Institute Discussion Papers, Tinbergen Institute 13-170/V, Tinbergen Institute.
    6. Till von Wachter & Jae Song & Joyce Manchester, 2011. "Trends in Employment and Earnings of Allowed and Rejected Applicants to the Social Security Disability Insurance Program," American Economic Review, American Economic Association, American Economic Association, vol. 101(7), pages 3308-29, December.
    7. Woock, Christopher, 2007. "The earnings losses of injured men: Accounting for injuries outside the Workers' Compensation system," MPRA Paper 14688, University Library of Munich, Germany.
    8. repec:clg:wpaper:2008-26 is not listed on IDEAS
    9. Halla, Martin & Zweim├╝ller, Martina, 2013. "The effect of health on earnings: Quasi-experimental evidence from commuting accidents," Labour Economics, Elsevier, Elsevier, vol. 24(C), pages 23-38.
    10. Singleton, Perry, 2012. "Earnings of rejected applicants to the Social Security Disability Insurance program," Economics Letters, Elsevier, Elsevier, vol. 116(2), pages 147-150.

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