Promoting Employment of Disabled Women in Spain; Evaluating a Policy

The Social Security system is Spain provides four different types of permanente disability pensions which are granted according to the severity of the disabling condition and the remaining capacity to work that is left for these individuals. Therefore, the system is designed to allow for a certain part of the disabled individuals to work while receiving the disability pension. However, the majority of these individuals do not effectively work and employment rates for this group of people have remained very low since 1996. The aim of this research is to evaluate the results of an employment promotion policy introduced in 2004 which increased the deductions of the Social Security contributions paid by employers that hire disabled women. In order to do that we first analyze employment rates of disabled individuals in Spain from 1996 until 2007 followed by the estimation of a bivariate probit model to evaluate the existence of shifts in employment trends in the women relative to the men sample conditioning on the existence of preexisting trends. We find that the increase in the deductions of the Social Security contributions resulted in rises in employment rates for disabled women with respect to disabled men.