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The Longitudinal Structure of Earnings Losses among Work-Limited Disabled Workers

  • Kerwin Kofi Charles
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    This paper asks: What are the dynamic effects of disability on earnings? Unlike most of the previous literature, it uses panel data, and fixed effects methods are used to assess how the earnings of disabled workers depart from expected levels over many years before and after the date of onset of their disability. The paper also examines how worker characteristics affect earnings losses from disability, with particular attention paid to the age at which the person suffers onset. Disabled men are found to experience sharp drops in earnings that predate the measured date of onset. Earnings recover rapidly soon after onset, with much of the immediate reduction made up in the first two post-onset years. A modest downward trend follows, resulting in significant long-term losses in expected annual earnings of about 12 percent per year. Being older at onset, nonwhite, more chronically disabled, and less educated cause the losses from disability to be larger and the recovery smaller. A large portion of these differences across groups appear to derive from industry affiliation after onset. The Paper argues the facts are all consistent with a simple human capital explanation of the disability process.

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    File URL: http://jhr.uwpress.org/cgi/reprint/XXXVIII/3/618
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    Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

    Volume (Year): 38 (2003)
    Issue (Month): 3 ()
    Pages:

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    Handle: RePEc:uwp:jhriss:v:38:y:2003:i:3:p618-646
    Contact details of provider: Web page: http://jhr.uwpress.org/

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    1. Alan Krueger & Douglas Kruse, 1995. "Labor Market Effects of Spinal Cord Injuries in the Dawn of the Computer Age," Working Papers 728, Princeton University, Department of Economics, Industrial Relations Section..
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    8. Benitez-Silva, Hugo & Buchinsky, Moshe & Chan, Hiu Man & Rust, John & Sheidvasser, Sofia, 1999. "An empirical analysis of the social security disability application, appeal, and award process," Labour Economics, Elsevier, vol. 6(2), pages 147-178, June.
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    12. Steven Stern, 1989. "Measuring the Effect of Disability on Labor Force Participation," Journal of Human Resources, University of Wisconsin Press, vol. 24(3), pages 361-395.
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