Estimating the Income Loss of Disabled Individuals: The Case of Spain

26 Pages Posted: 6 Oct 2012 Last revised: 19 Sep 2024

See all articles by María Cervini-Plá

María Cervini-Plá

University of Girona - Department of Economics

José I. Silva

University of Girona

Judit Vall Castelló

Universitat Pompeu Fabra (UPF) - Center for Research in Health and Economics (CRES)

Abstract

In this paper, we present both a theoretical and an empirical model in order to identify the effects of disability on wages. In the theoretical model we assume that the wage gap of a disabled worker depends on a permanent and a transitory productivity gap and the model predicts that the wage gap will be lower after gaining some work experience in the new job. We test this theoretical hypothesis using an exogenous health shock and matching methods associated with treatment effect techniques for policy evaluation. In all our specifications, we find that the reduction of the wage for the disabled is between 293 and 342 euros per month expressed in constant terms at 2010 prices (21-24% of the average wage of disabled workers) but this reduction is more than offset when we take into account both the disability benefits and the wage. As predicted in the theoretical model, we observe that the pay gap between the disabled and the non-disabled individuals falls over time once the transitory drop in productivity is disappearing. However, we observe a constant wage gap that remains over time and that corresponds to the permanent fall in productivity predicted by the theoretical model.

Keywords: matching techniques, earnings gap, disabled workers

JEL Classification: I10, J24, J31

Suggested Citation

Cervini-Plá, María and Silva, José I. and Castelló, Judit Vall, Estimating the Income Loss of Disabled Individuals: The Case of Spain. IZA Discussion Paper No. 6752, Available at SSRN: https://ssrn.com/abstract=2157894

María Cervini-Plá (Contact Author)

University of Girona - Department of Economics ( email )

Campus de Montilivi
Girona, Girona 17071
Spain

José I. Silva

University of Girona ( email )

Carrer de la Universitat de Girona, 10
Departament d'Economia
Girona, Girona 17003
Spain

Judit Vall Castelló

Universitat Pompeu Fabra (UPF) - Center for Research in Health and Economics (CRES) ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
30
Abstract Views
576
PlumX Metrics