The Labor Market Experience of Workers with Disabilities: The ADA and Beyond

By Julie Hotchkiss

 

            This book uses relatively straightforward and appropriate estimation methods to measure the effect of the Americans with Disabilities Act (ADA) on the labor market experience of disabled people.  The main part of the book takes each component of labor market experience and measures changes in the experience of disabled people, relative to nondisabled people, before and after the passage of the ADA.  The components of experience include employment, wages, hours, and occupational and industrial distribution.  In those cases where it is appropriate, the author controls for important potential selection effects.  The empirical results are revealing and credible.  On the other hand, some of the policy analysis is not well motivated and defended.  Overall, the book is quite useful in understanding trends in labor market experience of disabled people over the 1990s.

 

            The first critical chapter examines changes in employment patterns among disabled people and considers the effect of the ADA on those changes.  Other researchers such as De Liere in Journal of Human Resources (2001) and Acemoglu and Angrist in Journal of Political Economy (2001) show that the effect of the ADA was to reduce employment rates among disabled people.  Hotchkiss provides important results relevant to understanding the earlier researchers’ results.  First, she shows that the effect is really a labor force participation effect rather than an employment effect.  In particular, the labor force participation rate of disabled people fell after the passage of the ADA, and, once one controls for changes in labor force participation, the employment effect disappears.  Second, she shows that the reduction in the labor force participation rate is due to a movement of people from self described nondisabled out of the labor force to self described disabled out of the labor force.  This is consistent with other work (e.g., Kreider in Journal of Human Resources (1999)) that suggests that self classification of disability may be endogenous.  While her results suggest that the ADA was not harmful to disabled people, they still do not suggest that it provided significant benefits for disabled people.

 

            The second chapter looks at the effects of the ADA on wages of disabled people after controlling for employment.  Hotchkiss finds a small reduction in wages for disabled people, especially for people with musculoskeletal problems.  She provides some evidence that the reduction occurs for all disabled people and not just those at firms covered by the ADA.  She concludes that the reduction does not reflect the cost of accommodation because it affects all disabled people.  The reasoning here is weak.  Consider the alternative that the wage reduction represents the cost of accommodation.  Those disabled workers remaining in the covered sector should observe a reduction in wages.  Some workers will move from the covered sector to the uncovered sector thus reducing wages in the uncovered sector as well.  In a more general sense, Hotchkiss never comes to terms with the Coase argument: if the accommodations mandated by the ADA were beneficial to the disabled worker and firm jointly, then the accommodations would have been initiated by the firm and the cost would have been shared by the worker and the firm.  Maybe the Coase argument is not appropriate here, but it is incumbent upon Hotchkiss to recognize the point and provide evidence why it is not appropriate.

 

            The next chapter looks at other employment characteristics and focuses on hours.  Hotchkiss finds that the ADA increased the incidence of part-time work among disabled people.  She suggests that movement from part-time to full-time work may have been an accommodation by firms to disabled workers.  I find this a reasonable conjecture, but I would have liked to see more critical analysis.  For example, if it was just an accommodation, then other job characteristics such as wage should not have changed; i.e., part-time jobs should look like full-time jobs with just fewer hours.  This is not the case as, for example, hourly wages of part-time disabled workers fall relative to hourly wages of full-time disabled workers.  On the other hand, there is still the empirical fact that part-time employment increased post ADA.  There is some discussion in the chapter distinguishing between “voluntary” and “involuntary” hours reduction, but I could find no definition of “voluntary.”

 

            Hotchkiss shows some results on the distribution of workers across different industries and occupations.  For me, the most salient characteristic of this data was the volatility of the distribution measure over time.  I did not feel comfortable interpreting any of the results in this discussion given the unreasonable amount of volatility.

 

            The next chapter looks at unemployment and search behavior.  The data used here is unemployment duration data in the Current Population Survey.  There is data only on the length of unfinished spells of unemployment.  Since this data provides no information about unemployment spell behavior except under very restrictive and unreasonable assumptions, I found this chapter unconvincing.

 

            The last empirical chapter looks at the effect of state versions of ADA-type laws on behavior.  I found this chapter extremely useful.  First, the chapter has a table of relevant state laws that should provide an extremely useful resource for many other researchers.  Second, Hotchkiss shows that much of the lack of effect of the ADA can be attributed to earlier passage of similar laws at the state level.  In particular, in a regression including dummies for the passage of the ADA and passage for each state law, she finds that the state law dummies are jointly significant and have expected signs while the ADA dummies have no significant effect.

 

            The final chapter is a less formal discussion of policy issues.  Unfortunately, it does not really follow from the earlier analysis.  Maybe the best example of this lack of connection is a discussion advocating for more education programs for disabled people.  To support such an argument, Hotchkiss should have included interactions of education with disability status, maybe also interacted with the ADA passage variable.  For example, had such a regression shown that disabled people have a low rate of return to education, then her argument would not work.  Nevertheless, the chapter provides a nice summary of the set of programs for disabled people presently being considered by policymakers.

 

            Overall, I found the book easy to read and informative, and it affected the way I think about the ADA.  I recommend it to all researchers interested in the economics of disability.

 

Steven Stern

Merrill Bankard Professor of Economics

University of Virginia