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

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  • Michael Lechner

    ()

  • Rosalia Vazquez-Alvarez

    ()

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 Department of Economics, University of St. Gallen in its series University of St. Gallen Department of Economics working paper series 2003 with number 2003-20.

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Length: 75 pages
Date of creation: Dec 2003
Date of revision:
Handle: RePEc:usg:dp2003:2003-20

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Keywords: Treatment Effect; Evaluation of disability policies; Health Status; Causality; matching on the propensity score; labour markets outcomes.;

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References

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  1. Mueser, Peter R. & Troske, Kenneth & Gorislavsky, Alexey, 2003. "Using State Administrative Data to Measure Program Performance," IZA Discussion Papers 786, Institute for the Study of Labor (IZA).
  2. Arulampalam, W. & Robin A. Naylor & Jeremy P. Smith, 2002. "University of Warwick," Royal Economic Society Annual Conference 2002, Royal Economic Society 9, Royal Economic Society.
  3. Even, William E. & Macpherson, David A., 1990. "Plant size and the decline of unionism," Economics Letters, Elsevier, Elsevier, vol. 32(4), pages 393-398, April.
  4. Kidd, Michael P. & Sloane, Peter J. & Ferko, Ivan, 2000. "Disability and the labour market: an analysis of British males," Journal of Health Economics, Elsevier, Elsevier, vol. 19(6), pages 961-981, November.
  5. 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, American Statistical Association, vol. 102, pages 432-441, June.
  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, Elsevier, vol. 121(1-2), pages 99-124.
  7. Arild Aakvik, 2003. "Estimating the employment effects of education for disabled workers in Norway," Empirical Economics, Springer, Springer, vol. 28(3), pages 515-533, July.
  8. Manski, C.F., 1990. "The Selection Problem," Working papers, Wisconsin Madison - Social Systems 90-12, Wisconsin Madison - Social Systems.
  9. 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, University of Western Ontario, CIBC Centre for Human Capital and Productivity 20035, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  10. 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, Chicago - Economics Research Center 88-12, Chicago - Economics Research Center.
  11. (*), Nigel Rice & Paul Contoyannis, 2001. "The impact of health on wages: Evidence from the British Household Panel Survey," Empirical Economics, Springer, Springer, vol. 26(4), pages 599-622.
  12. 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, Wiley Blackwell, vol. 64(4), pages 605-54, October.
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Citations

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Cited by:
  1. Marta Pascual & David Cantarero, 2005. "Health And Socio-Economic Inequalities In The European Union," ERSA conference papers ersa05p555, European Regional Science Association.
  2. Behncke, Stefanie, 2009. "How Does Retirement Affect Health?," IZA Discussion Papers 4253, Institute for the Study of Labor (IZA).
  3. Wuellrich, Jean-Philippe, 2010. "The effects of increasing financial incentives for firms to promote employment of disabled workers," Economics Letters, Elsevier, Elsevier, vol. 107(2), pages 173-176, May.
  4. González Álvarez, Mª Luz & Gamero-Burón, Carlos, 2013. "Coste de las visitas médicas y urgencias asociadas al estrés laboral en España/Health Care Costs Due to Job Stress in Spain," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 31, pages 417-444, Septiembr.
  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. 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, HEDG, c/o Department of Economics, University of York 08/23, HEDG, c/o Department of Economics, University of York.
  7. Cain Polidano & Ha Vu, 2012. "Labour market impacts from disability onset," ANU Working Papers in Economics and Econometrics, Australian National University, College of Business and Economics, School of Economics 2012-583, Australian National University, College of Business and Economics, School of Economics.
  8. Lalive, Rafael & Wuellrich, Jean-Philippe & Zweimüller, Josef, 2009. "Do Financial Incentives for Firms Promote Employment of Disabled Workers? A Regression Discontinuity Approach," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7373, C.E.P.R. Discussion Papers.
  9. Pascual, Marta & Cantarero, David, 2007. "Socio-demographic determinants of disabled people: An empirical approach based on the European Community Household Panel," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 36(2), pages 275-287, April.
  10. 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, Springer, vol. 18(2), pages 146-165, April.
  11. Caliendo, Marco, 2009. "Income Support Systems, Labor Market Policies and Labor Supply: The German Experience," IZA Discussion Papers 4665, Institute for the Study of Labor (IZA).
  12. Cain Polidano & Ha Vu, 2012. "Labour Market Impacts from Disability Onset," Melbourne Institute Working Paper Series, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne wp2012n22, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  13. 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).
  14. 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).
  15. 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.
  16. 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, Economic and Social Research Institute (ESRI) HRBWP25, Economic and Social Research Institute (ESRI).

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