Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/284052 
Year of Publication: 
2023
Series/Report no.: 
Working Paper No. WP 2023-11
Publisher: 
Federal Reserve Bank of Chicago, Chicago, IL
Abstract: 
I study the effect o f a q uota f or disabled workers o n t he l abor m arket a nd o n welfare. Using a task-based model, I show that the effect o f a q uota w ill d epend o n the productivity of disabled workers and their labor supply elasticity. I estimate the productivity of disabled workers using variation from inspections of the quota. I find that the quota increased the hiring of disabled workers, but it reduced wages and employment of non-disabled workers, suggesting that the quota reduced firms' productivity. I estimate the labor supply elasticity of disabled workers using heterogeneous exposure across regions. Using the model calibrated to the empirical estimates, I find t hat the quota for disabled workers decreased welfare by 0.33% and forced the government to increase marginal taxes. However, alternatively, a subsidy for disabled workers could increase welfare
Subjects: 
quota for disabled workers
disability insurance
fiscal policy
JEL: 
E6
H2
H5
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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