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The Effect of Disability on Labour Market Outcomes in Germany: Evidence from Matching

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  • Lechner, Michael

    () (University of St. Gallen)

  • Vazquez-Alvarez, Rosalia

    () (Dubai Economic Council)

Abstract

If labour market policies aimed at people with disabilities are effective, we should observe no significant difference in labour market outcomes between disable and non-disable individuals. This paper examines the impact of disability status on labour market outcomes using matching methods associated with treatment effect techniques for program 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 disable experience higher employment rates and higher earnings relative to those who have become disable. This difference is almost always significant for all labour market outcomes considered.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 967.

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Length: 76 pages
Date of creation: Dec 2003
Date of revision:
Handle: RePEc:iza:izadps:dp967

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Related research

Keywords: treatment effect; evaluation of disability policies; health status; causality; matching on the propensity score; labour market outcomes;

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References

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  1. Ian Walker & Adrian Thompson, 1996. "Disability Wages and Labour Force Participation: Evidence from UK Panal Data," Keele Department of Economics Discussion Papers (1995-2001) 96/14, Department of Economics, Keele University.
  2. Jeffrey Smith & Petra Todd, 2003. "Does Matching Overcome Lalonde's Critique of Nonexperimental Estimators?," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20035, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  3. Arild Aakvik, 2003. "Estimating the employment effects of education for disabled workers in Norway," Empirical Economics, Springer, vol. 28(3), pages 515-533, July.
  4. (*), Nigel Rice & Paul Contoyannis, 2001. "The impact of health on wages: Evidence from the British Household Panel Survey," Empirical Economics, Springer, vol. 26(4), pages 599-622.
  5. Even, William E. & Macpherson, David A., 1990. "Plant size and the decline of unionism," Economics Letters, Elsevier, vol. 32(4), pages 393-398, April.
  6. Black, Dan A. & Smith, J.A.Jeffrey A., 2004. "How robust is the evidence on the effects of college quality? Evidence from matching," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 99-124.
  7. Peter R. Mueser & Kenneth Troske & Alexey Gorislavsky, 2003. "Using State Administrative Data to Measure Program Performance," Working Papers 0309, Department of Economics, University of Missouri.
  8. Heckman, J.J. & Hotz, V.J., 1988. "Choosing Among Alternative Nonexperimental Methods For Estimating The Impact Of Social Programs: The Case Of Manpower Training," University of Chicago - Economics Research Center 88-12, Chicago - Economics Research Center.
  9. Manski, C.F., 1990. "The Selection Problem," Working papers 90-12, Wisconsin Madison - Social Systems.
  10. Arulampalam, W. & Robin A. Naylor & Jeremy P. Smith, 2002. "University of Warwick," Royal Economic Society Annual Conference 2002 9, Royal Economic Society.
  11. Michael P. Kidd & Peter J. Sloane & Ivan Ferko, 1998. "Disability and the Labour Market: an analysis of British males," Working Papers 98-10, Department of Economics, University of Aberdeen.
  12. Kreider, Brent & Pepper, John V., 2007. "Disability and Employment: Reevaluating the Evidence in Light of Reporting Errors," Journal of the American Statistical Association, American Statistical Association, vol. 102, pages 432-441, June.
  13. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
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Citations

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Cited by:
  1. Caliendo, Marco, 2009. "Income support systems, labor market policies and labor supply: the German experience," Working Paper Series 2009:26, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  2. Suhrcke, Marc & Urban, Dieter M. & Moesgaard Iburg, Kim & Schwappach, David & Boluarte, Till & McKee, Martin, 2007. "The economic benefits of health and prevention in a high-income country: the example of Germany," Discussion Papers, Research Group Public Health SP I 2007-302, Social Science Research Center Berlin (WZB).
  3. Behncke, Stefanie, 2009. "How Does Retirement Affect Health?," IZA Discussion Papers 4253, Institute for the Study of Labor (IZA).
  4. Humer, Brigitte & Wuellrich, Jean-Philippe & Zweimüller, Josef, 2007. "Integrating Severely Disabled Individuals into the Labour Market: The Austrian Case," IZA Discussion Papers 2649, Institute for the Study of Labor (IZA).
  5. Verick, Sher, 2004. "Do Financial Incentives Promote the Employment of the Disabled?," IZA Discussion Papers 1256, Institute for the Study of Labor (IZA).
  6. Rafael Lalive & Jean-Philippe Wuellrich & Josef Zweimüller, 2009. "Do Financial Incentives for Firms Promote Employment of Disabled Workers? A Regression Discontinuity Approach," NRN working papers 2009-11, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  7. Pilar García-Gómez & Hans-Martin Gaudecker & Maarten Lindeboom, 2011. "Health, disability and work: patterns for the working age population," International Tax and Public Finance, Springer, vol. 18(2), pages 146-165, April.
  8. David Casado-Marín & Pilar García-Gómez & Ángel López-Nicolás, 2008. "Labour and income effects of caregiving across Europe: an evaluation using matching techniques," Health, Econometrics and Data Group (HEDG) Working Papers 08/23, HEDG, c/o Department of Economics, University of York.
  9. Pascual, Marta & Cantarero, David, 2007. "Socio-demographic determinants of disabled people: An empirical approach based on the European Community Household Panel," The Journal of Socio-Economics, Elsevier, vol. 36(2), pages 275-287, April.
  10. Nolan, Anne, 2006. "Evaluating the Impact of Eligibility for Free Care on the Use of GP Services in Ireland: A Difference-in-Difference Matching Approach," Papers HRBWP25, Economic and Social Research Institute (ESRI).
  11. Wuellrich, Jean-Philippe, 2010. "The effects of increasing financial incentives for firms to promote employment of disabled workers," Economics Letters, Elsevier, vol. 107(2), pages 173-176, May.
  12. Cain Polidano & Ha Vu, 2012. "Labour market impacts from disability onset," ANU Working Papers in Economics and Econometrics 2012-583, Australian National University, College of Business and Economics, School of Economics.
  13. Marta Pascual & David Cantarero, 2005. "Health And Socio-Economic Inequalities In The European Union," ERSA conference papers ersa05p555, European Regional Science Association.
  14. Pilar Garc�a Gómez & Angel López Nicolás, 2006. "Health shocks, employment and income in the Spanish labour market," Health Economics, John Wiley & Sons, Ltd., vol. 15(9), pages 997-1009.

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