If labour market policies aimed at people with disabilities are effective, we should observe no
significant difference in labour market outcomes between disable and non-disable individuals.
This paper examines the impact of disability status on labour market outcomes using
matching methods associated with treatment effect techniques for program evaluation. Such
techniques are fairly robust with respect to model misspecification and account for the
common support problem, thus improving the identification and estimation strategy. Using the
German Socio Economic Panel (1984-2001) we estimate the impact of disability on labour
market participation and different income measures. We find that those who are not disable
experience higher employment rates and higher earnings relative to those who have become
disable. This difference is almost always significant for all labour market outcomes
considered.
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