Measuring the Effects of Employment Protection Policies for the Disabled: Theory and Evidence from the Americans with Disabilities Act
Serena Rhee and
No 201621, Working Papers from University of Hawaii at Manoa, Department of Economics
We evaluate the Americans with Disabilities Act(ADA) using a directed search model in which firms post health-contingent wage contracts. We theoretically show that the ADA benefits disabled workers at the expense of non-disabled workers if firms face a high penalty for preferentially hiring non-disabled, whereas the disabled are worse off if the expected cost from terminating a disabled employee is high. Our estimation results imply that disabled job-finding and job-separation rates decreased, suggesting that for firms, the cost of hiring discrimination is lower than disabled worker termination. Overall, the ADA caused a 2:2 percentage point decline in disabled employment rates.
Keywords: Americans with Disabilities Act; employment protection; search friction; wage posting; job-finding rate (search for similar items in EconPapers)
JEL-codes: J64 J68 J78 K31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-lab and nep-law
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Journal Article: Measuring the effects of employment protection policies: Theory and evidence from the Americans with Disabilities Act (2018)
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