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Measuring the effects of employment protection policies: Theory and evidence from the Americans with Disabilities Act

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  • Kim, Soojin
  • Rhee, Serena

Abstract

Title I of the Americans with Disabilities Act (ADA) is an employment protection policy for disabled workers. By exploiting cross-state variation in pre-ADA legislation, we measure the effects of the law on transition rates of disabled workers. We find a decline in employment-to-non-employment transitions after the ADA, with an insignificant change in flow into employment. We use a model to disentangle the costs of firing and hiring imposed by the ADA. Our findings suggest that the ADA induces firms to fire less frequently but become more selective with new hires, impacting the aggregate productivity of the workforce and output of the economy.

Suggested Citation

  • Kim, Soojin & Rhee, Serena, 2018. "Measuring the effects of employment protection policies: Theory and evidence from the Americans with Disabilities Act," Labour Economics, Elsevier, vol. 54(C), pages 116-134.
  • Handle: RePEc:eee:labeco:v:54:y:2018:i:c:p:116-134
    DOI: 10.1016/j.labeco.2018.08.001
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    More about this item

    Keywords

    Americans with Disabilities Act; Employment protection; Search friction; Worker flows;

    JEL classification:

    • J78 - Labor and Demographic Economics - - Labor Discrimination - - - Public Policy (including comparable worth)
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

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