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Economic consequences of employment quota system for disabled people: Evidence from a regression discontinuity design in Japan

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  • Mori, Yuko
  • Sakamoto, Norihito

Abstract

This study examines the effect of Japanese employment quota system for disabled people on their employment. By using administrative data from Japan, we show that a levy-grant scheme increases the employment of disabled workers in Japan's manufacturing industry. In addition, we find that small-sized firms hire disabled workers when increasing firm size, although they are not obligated to pay levies. Finally, we use the number of disabled workers assigned by the quota system as an instrumental variable (IV) to evaluate the impact of disability employment on a firm's profit rate. The results of the fuzzy regression discontinuity design (RDD) suggest that an increase in the number of disabled workers does not necessarily decrease a firm's profit rate, which is in contrast to the results of the ordinary least squares (OLS) regression that suggest a negative relationship between the profit rate and disability employment.

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  • Mori, Yuko & Sakamoto, Norihito, 2018. "Economic consequences of employment quota system for disabled people: Evidence from a regression discontinuity design in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 48(C), pages 1-14.
    • Handle: RePEc:eee:jjieco:v:48:y:2018:i:c:p:1-14
    DOI: 10.1016/j.jjie.2017.02.001
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    1. Halil Baris Ozel & Hakan Sevik & Mehmet Cetin & Tugrul Varol & Berkant Isik, 2026. "Impact of employment policies on disabled individuals in silvicultural activities," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 28(1), pages 1253-1266, January.
    2. José Manuel Santos & Esther Ortiz Martínez & Salvador Marín Hernández, 2021. "Centros Especiales de Empleo ¿Objetivo mercantil o social? Un análisis a través del estudio de su situación económico-financiera," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 51, pages 83-105.
    3. Kenichi Kuromiya, 2022. "Econometric analysis of the employment of persons with disabilities in prefectural boards of education," International Journal of Economic Policy Studies, Springer, vol. 16(2), pages 423-441, August.
    4. Jiaqi Jing & Xiaoqing Feng & Jianbo Song & Boya Li, 2022. "Does the Inclusion of Disabled Employees Affect Firm Performance? Empirical Evidence from China," Sustainability, MDPI, vol. 14(13), pages 1-22, June.
    5. Kodai MATSUMOTO & Yota OKUMURA & Atsushi MORIMOTO & Kazufumi YUGAMI, 2023. "The Effects of Financial Incentives on Small and Medium-sized Enterprises' Demand for Workers with Disabilities: Evidence from changes in Japan's employment quota system," Discussion papers 23019, Research Institute of Economy, Trade and Industry (RIETI).
    6. Kodai MATSUMOTO & Yota OKUMURA & Kenta NAKAMURA & Atsushi MORIMOTO & Kazufumi YUGAMI, 2024. "Disability Employment and Firm Productivity: Evidence from a novel panel data in Japan," Discussion papers 24045, Research Institute of Economy, Trade and Industry (RIETI).
    7. Judit Krekó & Álmos Telegdy, 2025. "The effects of a disability employment quota when compliance is cheaper than defiance," Economica, London School of Economics and Political Science, vol. 92(366), pages 614-643, April.
    8. Singh Amrik, 2024. "Employment of Specially-Abled People in the Hotel Industry—An Indian perspective," European Journal of Tourism, Hospitality and Recreation, Sciendo, vol. 14(1), pages 1-19.
    9. Chi Kin Kwan, 2020. "Socially responsible human resource practices to improve the employability of people with disabilities," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(1), pages 1-8, January.
    10. Derbyshire, Daniel W. & Jeanes, Emma & Khedmati Morasae, Esmaeil & Reh, Susan & Rogers, Morwenna, 2024. "Employer-focused interventions targeting disability employment: A systematic review," Social Science & Medicine, Elsevier, vol. 347(C).
    11. Berlinski, Samuel & Gagete-Miranda, Jessica, 2025. "Enforcement spillovers under different networks: The case of quotas for persons with disabilities in Brazil," Journal of Development Economics, Elsevier, vol. 176(C).
    12. Duryea, Suzanne & Martínez, Claudia & Smith, Raimundo, 2024. "Disability Employment Quotas: Effects of Laws and Nudges," IDB Publications (Working Papers) 13375, Inter-American Development Bank.
    13. José Manuel Maside-Sanfiz & María-Celia López-Penabad & Ana Iglesias-Casal & Juan Torrelles Manent, 2024. "Determinants of the profitability of Sheltered Workshops: efficiency and effects of the COVID-19 crisis," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    14. Gustavo de Souza, 2020. "Employment and Welfare Effects of the Quota for Disabled Workers in Brazil," Working Paper Series WP 2023-11, Federal Reserve Bank of Chicago.
    15. repec:rza:wpaper:895 is not listed on IDEAS

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    Keywords

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    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • J78 - Labor and Demographic Economics - - Labor Discrimination - - - Public Policy (including comparable worth)

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