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Partial Disability System and Labor Market Adjustment: The Case of Spain

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  • Jose I. Silva

    (University Of Kent)

  • Judit Vall-Castello

    (Universitat de Girona)

Abstract

Although partially disabled individuals in Spain are allowed to combine the receipt of disability benefits with a job, the empirical evidence shows that employment rates for this group of individuals are very low. Therefore, in this paper we construct labor market model with search intensity and matching frictions in order to identify the incentives and disincentives to work provided by the partial disability system in Spain from the point of view of both disabled individuals and employers. According to the model, the high employment rate gap observed between nondisabled and disabled workers can be partially explained by the presence of a lower level of productivity and higher searching costs among disabled individuals that discourage them from looking for jobs. Moreover, the design of the Spanish Disability System also contributes in explaining this gap. We also analyze the role of business cycle conditions in shaping the labor market transitions of disabled individuals.

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Bibliographic Info

Paper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number 13-201.

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Date of creation: Jul 2013
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Handle: RePEc:upj:weupjo:13-201

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Keywords: disability system; job search intensity; flow analysis;

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References

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  1. Judit Vall Castello, 2010. "Promoting Employment of Disabled Women in Spain; Evaluating a Policy," Working Papers 2010-10, FEDEA.
  2. Vall Castello, Judit, 2012. "Promoting employment of disabled women in Spain; Evaluating a policy," Labour Economics, Elsevier, vol. 19(1), pages 82-91.
  3. Cervini-Plá, María & Silva, José I. & Vall-Castello, Judit, 2012. "Estimating the Income Loss of Disabled Individuals: The Case of Spain," IZA Discussion Papers 6752, Institute for the Study of Labor (IZA).
  4. José Silva & Javier Vázquez-Grenno, 2011. "The ins and outs of unemployment and the assimilation of recent immigrants in Spain," Journal of Population Economics, Springer, vol. 24(4), pages 1309-1330, October.
  5. Miguel Á. MALO & Ricardo PAGÁN, 2012. "Wage differentials and disability across Europe: Discrimination and/or lower productivity?," International Labour Review, International Labour Organization, vol. 151(1-2), pages 43-60, 06.
  6. Silva, José I. & Vall-Castello, Judit, 2012. "Why Are So Many Disabled Individuals Not Working in Spain? A Job Search Approach," IZA Discussion Papers 6317, Institute for the Study of Labor (IZA).
  7. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
  8. David H. Autor & Mark G. Duggan & David S. Lyle, 2011. "Battle Scars? The Puzzling Decline in Employment and Rise in Disability Receipt among Vietnam Era Veterans," American Economic Review, American Economic Association, vol. 101(3), pages 339-44, May.
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