Differences in the Returns to Education for Males by Disability Status and Age of Disability Onset

We examine linkages between disability and the returns to education for males, incorporating the role that age of disability onset may play in these returns. Our analyses are based on the 1993 Panel of the Survey of Income and Program Participation and exploit detailed information regarding productivity‐related functional limitations. We estimate a three‐state switching regression model that includes a Heckman‐type employment correction. The coefficient estimates vary by disability status—early‐onset disability, late‐onset disability, and non‐disabled. Our research contributes to the disability literature by providing details on the role that education may play in the lives of persons with disabilities, depending on the age at which the disability first manifests itself. Overall, we find that males who experience disability onset after reaching adulthood experience substantial wage returns to education, larger than the returns for the non‐disabled population. The average wages of individuals with poor health or disability, regardless of age of onset, are below those of the non‐disabled, however, so education may serve as a buffer to protect against potential negative wage effects of becoming disabled, but this “insurance” is not sufficient to close the gap.