Employment (Co-authored with Ludmila Rovba)
Employment levels of the disabled are affected by both labor supply and labor demand issues. Individuals suffering from a functional disability will also experience a larger cost to entering the labor market as, holding all else constant, greater effort or sacrifices must be made relative to nondisabled workers. The net result is that the reservation wage (the wage at which a person is willing to enter the labor market) for disabled individuals will be higher than for the nondisabled, and fewer disabled people will choose to enter the labor market, ceteris paribus. In addition, a person's functional disability will be more likely to render him or her less productive than an otherwise identical, nondisabled person. Consequently, the disabled worker will be less likely to qualify for a given job and therefore less likely to be hired. Merely a perception of lower productivity or a greater difficulty of predicting a disabled worker's productivity will reduce the likelihood of the individual being hired. So, for both supply and demand reasons, the employment levels of disabled workers would be expected to be lower than those of nondisabled workers. 1Figure 2.1 presents evidence from the CPS consistent with this prediction. 2 The proportion of disabled individuals employed in any given year is at least 44 percentage points lower than the share of nondisabled individuals employed in that year. Other observations are worth mentioning in comparing employment percentages. The recession dips of the early 1980s and early 1990s are obvious for the nondisabled, but not nearly as severe (in percentage terms) for the disabled. In addition, the employment percentage for the nondisabled has made a fairly steady climb over the entire period compared with the relatively stagnant, then declining, employment percentage of the disabled.
Legislation that potentially affects the costs of either labor force participation or of hiring a group of workers can be expected to impact the employment levels of that group. The ADA, through its required