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The effect of disability on labour market outcomes in Germany

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  • Michael Lechner
  • Rosalia Vazquez-Alvarez

Abstract

In this article we analyse the individual effects of becoming disabled on key aspects of labour market outcomes in Germany. The German Socio Economic Panel (1984-2002) collects socio-economic and health data. This data is organized such that the potential problems for such an estimation that may arise from disability not being a random event are considerably reduced. Using matching methods, we find a reduction of individual employment chances of about 9 to 13%, the level depending on the degree of disability. We find no statistically significant evidence for a reduction in income or an increase in unemployment due to disability. We interpret these findings as an indication that the German social security systems appear to successfully mitigate or at least reduce the economic hardship that comes with the event of disability.

Suggested Citation

  • Michael Lechner & Rosalia Vazquez-Alvarez, 2011. "The effect of disability on labour market outcomes in Germany," Applied Economics, Taylor & Francis Journals, vol. 43(4), pages 389-412.
    • Handle: RePEc:taf:applec:v:43:y:2011:i:4:p:389-412
    DOI: 10.1080/00036840802599974
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    References listed on IDEAS

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    1. Bell, David & Heitmueller, Axel, 2009. "The Disability Discrimination Act in the UK: Helping or hindering employment among the disabled?," Journal of Health Economics, Elsevier, vol. 28(2), pages 465-480, March.
    2. Verick, Sher, 2004. "Do Financial Incentives Promote the Employment of the Disabled?," IZA Discussion Papers 1256, Institute of Labor Economics (IZA).
    3. Christine Jolls & J.J. Prescott, 2004. "Disaggregating Employment Protection: The Case of Disability Discrimination," NBER Working Papers 10740, National Bureau of Economic Research, Inc.
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