Do Disability Laws Impair Firm Performance?

Abstract

Much has been written about the impact of disability laws on employers and employees. Yet there is little empirical support available on whether disability laws impact employers in a negative or positive way. We fill this gap in the literature by studying the impact of state disability laws adopted by legislatures and courts between 1976 and 1988. By examining the data of approximately 18,000 commercial banks and after controlling for local state economic conditions, we examine whether disability laws impact firm employment, salaries, profitability, and capital investments. We find a small decline in employee salaries and a large decline in fixed asset investment associated with the passage of state disability laws. Our results are significant and surprising, and have policy implications for both state and federal disability protections.

Keywords: disability, empirical, ADA, employment, discrimination, accommodation

JEL Classification: M51, J71, K31, D21, G21