Do Financial Incentives for Firms Promote Employment of Disabled Workers? A Regression Discontinuity Approach

44 Pages Posted: 26 Aug 2009

See all articles by Rafael Lalive

Rafael Lalive

University of Lausanne - Department of Economics; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Jean-Philippe Wuellrich

University of Zurich - Department of Economics

Josef Zweimüller

University of Zurich - Department of Economics; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Date Written: July 2009

Abstract

We study the impact of employment quota on firms' demand for disabled workers. The Austrian Disabled Persons Employment Act (DPEA) requires firms to provide at least one job to a disabled worker per 25 non-disabled workers, a rule which is strictly enforced by non-compliance taxation. We find that, as a result of the discontinuous nature of the non-compliance tax, firms exactly at the quota threshold employ 0.05 (20 % in relative terms) more disabled workers than firms just below the threshold - an effect that is unlikely driven by purposeful selection below the threshold. The flat rate nature of the non-compliance tax generates strong employment effects for low-wage firms and weak effects for high-wage firms. We also find that growing firms passing the quota threshold react with a substantial time-lag but the magnitude of the long-run effect is similar to the one found in cross-section contrasts.

Keywords: disability, discrimination, employment, employment quota, regression discontinuity

JEL Classification: J15, J20, J71, J78

Suggested Citation

Lalive, Rafael and Wuellrich, Jean-Philippe and Zweimueller, Josef, Do Financial Incentives for Firms Promote Employment of Disabled Workers? A Regression Discontinuity Approach (July 2009). CEPR Discussion Paper No. DP7373, Available at SSRN: https://ssrn.com/abstract=1462002

Rafael Lalive

University of Lausanne - Department of Economics ( email )

Batiment Internef
Lausanne, 1015
Switzerland

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

Jean-Philippe Wuellrich

University of Zurich - Department of Economics ( email )

Mühlebachstrasse 86
Zurich, 8008
Switzerland

HOME PAGE: http://www.iew.uzh.ch/index.html

Josef Zweimueller (Contact Author)

University of Zurich - Department of Economics ( email )

Zuerich, 8006
Switzerland
+411 634 3724 (Phone)
+411 634 4907 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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