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Do Financial Incentives for Firms Promote Employment of Disabled Workers? A Regression Discontinuity Approach

Author

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  • Lalive, Rafael
  • Wuellrich, Jean-Philippe
  • Zweimüller, Josef

Abstract

We study the impact of employment quota on firms' demand for disabled workers. The Austrian Disabled Persons Employment Act (DPEA) requires firms to provide at least one job to a disabled worker per 25 non-disabled workers, a rule which is strictly enforced by non-compliance taxation. We find that, as a result of the discontinuous nature of the non-compliance tax, firms exactly at the quota threshold employ 0.05 (20 % in relative terms) more disabled workers than firms just below the threshold - an effect that is unlikely driven by purposeful selection below the threshold. The flat rate nature of the non-compliance tax generates strong employment effects for low-wage firms and weak effects for high-wage firms. We also find that growing firms passing the quota threshold react with a substantial time-lag but the magnitude of the long-run effect is similar to the one found in cross-section contrasts.

Suggested Citation

  • 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 7373, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:7373
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    References listed on IDEAS

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    1. Welch, Finis, 1976. "Employment Quotas for Minorities," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 105-139, August.
    2. Lalive, Rafael, 2008. "How do extended benefits affect unemployment duration A regression discontinuity approach," Journal of Econometrics, Elsevier, vol. 142(2), pages 785-806, February.
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    4. Michael Lechner & Rosalia Vazquez-Alvarez, 2003. "The Effect of Disability on Labour Market Outcomes in Germany: Evidence from Matching," University of St. Gallen Department of Economics working paper series 2003 2003-20, Department of Economics, University of St. Gallen.
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    6. Verick, Sher, 2004. "Do Financial Incentives Promote the Employment of the Disabled?," IZA Discussion Papers 1256, Institute for the Study of Labor (IZA).
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    16. 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).
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    Citations

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    Cited by:

    1. Miguel Ángel Malo & Ricardo Pagan, 2014. "Hiring Workers with Disabilities when a Quota Requirement Exists: The Relevance of Firm’s Size," AIEL Series in Labour Economics,in: Dario Sciulli & Miguel Ángel Malo (ed.), Disadvantaged Workers, edition 1, chapter 4, pages 49-63 AIEL - Associazione Italiana Economisti del Lavoro.
    2. Hijzen, Alexander & Mondauto, Leopoldo & Scarpetta, Stefano, 2013. "The Perverse Effects of Job-Security Provisions on Job Security in Italy: Results from a Regression Discontinuity Design," IZA Discussion Papers 7594, Institute for the Study of Labor (IZA).
    3. Vall Castello, Judit, 2012. "Promoting employment of disabled women in Spain; Evaluating a policy," Labour Economics, Elsevier, vol. 19(1), pages 82-91.
    4. 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).
    5. Marie, Olivier & Vall Castello, Judit, 2012. "Measuring the (income) effect of disability insurance generosity on labour market participation," Journal of Public Economics, Elsevier, vol. 96(1), pages 198-210.
    6. repec:eee:labeco:v:46:y:2017:i:c:p:64-76 is not listed on IDEAS
    7. Wuellrich, Jean-Philippe, 2010. "The effects of increasing financial incentives for firms to promote employment of disabled workers," Economics Letters, Elsevier, vol. 107(2), pages 173-176, May.
    8. Frandsen, Brigham R. & Frölich, Markus & Melly, Blaise, 2012. "Quantile treatment effects in the regression discontinuity design," Journal of Econometrics, Elsevier, vol. 168(2), pages 382-395.

    More about this item

    Keywords

    disability; discrimination; employment; employment quota; regression discontinuity;

    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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