The Effect of Disability on Labour Market Outcomes in Germany: Evidence from Matching
University of St. Gallen - Swiss Institute for Empirical Economic Research
University of St. Gallen - Swiss Institute for International Economics and Applied Economic Research
IZA Discussion Paper No. 967; University St. Gallen, Department of Economics Discussion Paper No. 2003-20
If labour market policies aimed at people with disabilities are effective, we should observe no significant difference in labour market outcomes between disable and non-disable individuals. This paper examines the impact of disability status on labour market outcomes using matching methods associated with treatment effect techniques for program evaluation. Such techniques are fairly robust with respect to model misspecification and account for the common support problem, thus improving the identification and estimation strategy. Using the German Socio Economic Panel (1984-2001) we estimate the impact of disability on labour market participation and different income measures. We find that those who are not disable experience higher employment rates and higher earnings relative to those who have become disable. This difference is almost always significant for all labour market outcomes considered.
Number of Pages in PDF File: 76
Keywords: treatment effect, evaluation of disability policies, health status, causality, matching on the propensity score, labour market outcomes
JEL Classification: C13, C14, I12, I18, J23
Date posted: January 13, 2004
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