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Measuring the effects of employment protection policies: Theory and evidence from the Americans with Disabilities Act

Soojin Kim and Serena Rhee

Labour Economics, 2018, vol. 54, issue C, 116-134

Abstract: Title I of the Americans with Disabilities Act (ADA) is an employment protection policy for disabled workers. By exploiting cross-state variation in pre-ADA legislation, we measure the effects of the law on transition rates of disabled workers. We find a decline in employment-to-non-employment transitions after the ADA, with an insignificant change in flow into employment. We use a model to disentangle the costs of firing and hiring imposed by the ADA. Our findings suggest that the ADA induces firms to fire less frequently but become more selective with new hires, impacting the aggregate productivity of the workforce and output of the economy.

Keywords: Americans with Disabilities Act; Employment protection; Search friction; Worker flows (search for similar items in EconPapers)
JEL-codes: J64 J68 J78 K31 (search for similar items in EconPapers)
Date: 2018
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Working Paper: Measuring the Effects of Employment Protection Policies for the Disabled: Theory and Evidence from the Americans with Disabilities Act (2016) Downloads
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DOI: 10.1016/j.labeco.2018.08.001

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