Disability and Labor Market Performance

Matthias Collischon (), Karolin Hiesinger () and Laura Pohlan
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Matthias Collischon: Institute for Employment Research (IAB), Nuremberg
Karolin Hiesinger: Institute for Employment Research (IAB), Nuremberg

No 16100, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper analyzes the individual-level effects of disability onset on labor market outcomes using novel administrative data from Germany. Combining propensity score matching techniques with an event-study design, we find lasting negative impacts on employment and wages. One important mechanism is transitions to nonemployment after disability onset: newly disabled individuals' probability of becoming nonemployed increases by 10 percentage points after one year and by 15 percentage points after five years relative to that of the control group. For those who stay in employment, working part-time and switching to less physically or psychosocially demanding jobs are important adjustment paths. The negative labor market effects of disability onset are more pronounced for severely disabled, older and low-skilled individuals.

Keywords: propensity score matching; labor market outcomes; disability; event study (search for similar items in EconPapers)
JEL-codes: I10 J14 J21 J71 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2023-04
New Economics Papers: this item is included in nep-hea and nep-lab
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