Wage Differentials and Disability across Europe: Discrimination And/or Lower Productivity?

Article excerpt

Abstract.

The authors measure wage discrimination against disabled persons after controlling for unobserved disability-related productivity differences. Using data for 11 European countries from the European Community Household Panel (1995-2001), they estimate wage equations for persons with disabilities hampering them in daily activities, for those not hampered, and for non-disabled people. Most countries showed no relevant wage differential against disabled workers not so hampered, compared with non-disabled workers. Where it existed, it related mainly to low productivity characteristics, not wage discrimination. However, compared with non-disabled workers, disabled workers hampered in daily activities suffered from low productivity characteristics and wage discrimination.

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In recent years, there has been an increase in the number of policy measures promoting the employment of people with disabilities. In this context, the European Union has identified the fight against all forms of disability discrimination through the application of equal opportunities principles at work as a major challenge in the near future. Raising the employment and activity rates of disabled people therefore remains a priority.

A great many international studies analysing different aspects of disability have been published: for example, its negative effects on labour participation (Parsons, 1980; Kidd, Sloane and Ferko, 2000; Jones, Latreille and Sloane, 2006) and on wage levels (Baldwin and Johnson, 1994 and 1995; Kidd, Sloane and Ferko, 2000), amongst others. On the subject of wage differentials, Baldwin and Johnson (1994) point out that when decomposing an observed wage difference, great care and attention must be paid when interpreting the part not explained by differences in the characteristics of workers and jobs but arising exclusively from disability (usually termed "discrimination"). This is because that disability may itself be linked to differences in productivity not well captured by the characteristics of workers and jobs included in the wage equation. In other words, this component may include a mixed effect linked not only to the existence of employer discrimination against disabled workers, but also to an unobserved productivity difference linked to disability.

Using the European Community Household Panel (ECHP), our analysis seeks to identify disability-related wage discrimination and productivity differences. This data set allowed us to identify three different groups of workers: disabled persons who are hampered by their disabilities in their daily activities; disabled persons who are not hampered by their disabilities in their daily activities; and persons who are not disabled (Gannon, 2005).1 We assume that, potentially, workers with disabilities not hampered in their daily activities (because of personal or technical support, job adaptation, low level of impairment, etc.) achieve the same level of productivity as workers who are not disabled. Thus, if there is no discrimination by employers against these disabled workers we should not find any wage differences affecting them; indeed, any wage differences should relate to workers' and jobs' characteristics (for example, lower educational levels). We find such results for most of the 11 European countries considered. To our knowledge, this is a novel finding in the international literature on disability and wages. Furthermore, our analysis is relevant to the implementation of better-targeted employment policies for these workers - policies which go beyond anti-discrimination measures (which should concentrate on disabled workers hampered in their daily activities) and focus on measures to increase the productivity of all workers with disabilities, so as to increase their wages.

Background: Disability-related wage discrimination

There is an extensive literature confirming the common perception that prejudice against people with disabilities exists; according to Yuker (1987), the degree of such prejudice varies according to the type of impairment involved. …