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Title: Do Financial Incentives for Firms Promote Employment of Disabled Workers? A Regression Discontinuity Approach

Author(s): Rafael Lalive, Jean-Philippe Wuellrich and Josef Zweim�ller

Publication Date: July 2009

Keyword(s): disability, discrimination, employment, employment quota and regression discontinuity

Programme Area(s): Labour Economics

Abstract: We study the impact of employment quota on firms' demand for disabled workers. The Austrian Disabled Persons Employment Act (DPEA) requires firms to provide at least one job to a disabled worker per 25 non-disabled workers, a rule which is strictly enforced by non-compliance taxation. We find that, as a result of the discontinuous nature of the non-compliance tax, firms exactly at the quota threshold employ 0.05 (20 % in relative terms) more disabled workers than firms just below the threshold - an effect that is unlikely driven by purposeful selection below the threshold. The flat rate nature of the non-compliance tax generates strong employment effects for low-wage firms and weak effects for high-wage firms. We also find that growing firms passing the quota threshold react with a substantial time-lag but the magnitude of the long-run effect is similar to the one found in cross-section contrasts.

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Bibliographic Reference

Lalive, R, Wuellrich, J and Zweim�ller, J. 2009. 'Do Financial Incentives for Firms Promote Employment of Disabled Workers? A Regression Discontinuity Approach'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7373