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June 04, 2018

Disability and labor market disadvantage

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Disabled people, that is, individuals who report a long-term limiting health problem, are one of the most disadvantaged groups within the labor market. In the EU, for example, the employment rate among disabled people is just less than 50%. Moreover, the prevalence of disability amongst the population is sizable and often underestimated; with one in eight Europeans aged 15–64 currently disabled. The substantial disadvantage experienced by a significant minority means the experience of disabled people within the labor market is an issue of key social, economic, and fiscal policy importance, with governments internationally looking for effective solutions. In the UK, for example, where the disability employment gap, the difference in the employment rate between disabled and non-disabled people, is larger than the EU average, at 28 percentage points, the government has recently published Improving Lives—its strategy to get one million more disabled people into work over the next ten years. Yet, relative to some other protected characteristics, such as gender and race, evidence in relation to disability is relatively scarce.

A number of consistent findings emerge across countries: (i) Only part of the labor market disadvantage experienced by disabled people is explained by other factors, including personal characteristics such as age or educational attainment. This leaves a potentially important role for labor market discrimination; but that is often difficult to measure due to the potential for unobserved differences between disabled and non-disabled people, such as in terms of preferences or productivity. (ii) Longitudinal evidence, whereby the same people are traced before and after they become disabled, confirms that the relationship is causal or that becoming disabled leads to a decline in the probability of employment, rather than it simply reflecting pre-existing disadvantages among individuals who go on to become disabled. (iii) Heterogeneity among disabled people is important, with the magnitude of the labor market disadvantage found to relate to the severity of disability, suggesting the need for differentiated policy support. (iv) Labor market disadvantages do not simply reflect barriers to employment. Indicators of job quality, including pay and job satisfaction, also display a significant “disability gap,” which remains after accounting for differences in the nature of jobs between disabled and non-disabled employees, implying a role for employers and in-work policy support. (v) The concentration of disabled workers in non-standard work, such as part-time and self-employment, suggests the importance of job design, and flexibility in particular, to facilitate work for disabled people.  

The key question for policymakers who wish to improve the labor market outcomes of disabled people must be: Do we know what works to reduce their disadvantage? Unfortunately, and despite evaluation of a range of international policy initiatives, the evidence is limited in this regard. The lack of consensus, in part, reflects the fragmented nature of evaluations, which often focus on country- and institution-specific schemes including quotas, sheltered employment, wage subsidies, welfare reform, and employment support, where the results are not easily generalizable. However, even major changes in equality legislation, such as the introduction of the 1990 Americans with Disabilities Act, in which discrimination against disabled people in the US was made unlawful, have been shown to have little impact. It is the enduring nature of the labor market disadvantages faced by disabled people across countries that illustrates the scale of the policy challenge. It calls for a deeper understanding of the complex reasons underpinning the labor market experience of disabled people.

© Melanie Jones 

Read Melanie Jones' full article Disability and labor market outcomes.

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