Academic journal article Nordic Journal of Working Life Studies

Economic Evaluation of Supported-Employment Inspired Program for Pupils with Intellectual Disabilities

Academic journal article Nordic Journal of Working Life Studies

Economic Evaluation of Supported-Employment Inspired Program for Pupils with Intellectual Disabilities

Article excerpt

Introduction

While the UN Convention of the rights of persons with disabilities recognizes the right to work on an equal basis with others persons, job opportunities are often missing for people with intellectual disability (ID).1 There is ample evidence that there are effective remedies, in particular so-called Supported-Employment (SE) strategies (see Marshall et al., 2014, for a review). However, these programs are considered costly (as will be evidenced in the description of our study case). Even if a measure is proven to be efficient in a societal and long-term perspective, it may still be found too expensive to be given priority by a local government administration that has to balance its yearly budget.

Sub-optimization in public administration can arise from myopia and silo mentality in conventional budget planning, which possibly also hampers innovation (Hope & Fraser, 1997, 2003). A specific concern that relates to local government operations such as administration of education and social services is sub-optimization in the allocation of resources for prevention and early intervention policies for children and youth. Spending for such purposes can be seen as investment in human capital expected to yield individual and social benefits. However, these benefits evolve over the lifespan of the individuals. Also, the decision to allocate resources may be the responsibility of a specific division that possibly ignores effects that are external to its own budget.

In this study, we investigate whether, or to what degree, a 'business case' could be made for implementation of a SE-inspired program starting during the last school years, targeting youth with ID before, during and after transition to employment. For this aim, we do a quasi-experimental before-after intervention impact evaluation of a project funded by the European Social Fund in the Swedish city of Örebro (135,000 inhabitants) during 2010-2013. From an estimate of the average treatment effect, we calculate the internal net present value and the payback period that would make this program break even from avoided expenditure for day-activity services, assuming that it had been funded entirely by the municipality (or its social investment fund).

The next section gives some background on SE and the literature on impact and economic evaluation of such programs. Section 3 presents the study case, 'Job in Sight', and section 4 describes methods and data. Section 5 presents results, first from simple comparisons of outcomes between the intervention and control groups, then from the Probit model analysis, and finally the economic assessments. Discussion and conclusions follow in the end.

Background

In a recent review of the labor market situation of people with disabilities in the European Union, Greve (2009) observes that persons with disabilities generally '...experience considerable difficulties in entering and remaining in the labor market' (p. 11) and that these problems are especially large for persons with ID.

From an employer's point of view, the productivity of a young person without a previous employment history is an experience good (Tirole, 1988, ch. 5), that is, it is not revealed until after the decision to employ is made. As the degree of and nature of ID can vary substantially from person to person, this may give rise to statistical discrimination, that is, employers avert from hiring on a categorical instead of individual basis. On the supply side, that is, from the prospective employee's point of view, there can be similar concerns related to features that can only be learned from experience, for instance as to whether a specific employment opportunity would pose insurmountable intellectual, social, or practical challenges to the individual.2

As a response to such labor market matching issues for persons with ID, SE strategies were developed during the 1980s in the United States. A SE strategy aims at a competitive employment for individuals with disabilities using an empowerment approach (Germundsson et al. …

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