[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ukc/ukcedp/9813.html
   My bibliography  Save this paper

The Effect of Disability on Employment Allowing for Work Incapacity

Author

Listed:
  • Owen O'Donnell
Abstract
Previous modelling of the impact of disability on employment has failed to allow for a direct effect rendering some individuals capable of work. A model in which both a capacity and a desire for work are necessary conditions for employment is estimated from a sample of British disabled men. Recognition that individuals may be incapable of work helps identify work capacity and leads to a test for errors in reported capacity data. The capacity for work condition is found to be relevant and failure to allow for it results in overestimation of the wage elasticity of employment. The accuracy of self-reported capacity information is rejected.

Suggested Citation

  • Owen O'Donnell, 1998. "The Effect of Disability on Employment Allowing for Work Incapacity," Studies in Economics 9813, School of Economics, University of Kent.
    • Handle: RePEc:ukc:ukcedp:9813
    as

    Download full text from publisher

    File URL: https://www.kent.ac.uk/economics/repec/9813.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Haveman, Robert H. & Wolfe, Barbara L., 1984. "Disability transfers and early retirement: a casual relationship?," Journal of Public Economics, Elsevier, vol. 24(1), pages 47-66, June.
    2. Parsons, Donald O, 1980. "The Decline in Male Labor Force Participation," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 117-134, February.
    3. John C. Ham, 1982. "Estimation of a Labour Supply Model with Censoring Due to Unemployment and Underemployment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(3), pages 335-354.
    4. van Soest, A.H.O. & Fontein, P.F. & Euwals, R.W., 1996. "Earnings Capacity and Labour Market Participation," Other publications TiSEM 215e9f66-5c73-41ee-be7d-d, Tilburg University, School of Economics and Management.
    5. Richard Blundell & John Ham & Costas Meghir, 1989. "Unemployment and Female Labour Supply," Palgrave Macmillan Books, in: Joan Muysken & Chris Neubourg (ed.), Unemployment in Europe, chapter 1, pages 9-36, Palgrave Macmillan.
    6. Arrufat, Jose Luis & Zabalza, Antonio, 1986. "Female Labor Supply with Taxation, Random Preferences, and Optimization Errors," Econometrica, Econometric Society, vol. 54(1), pages 47-63, January.
    7. Bound, John, 1989. "The Health and Earnings of Rejected Disability Insurance Applicants," American Economic Review, American Economic Association, vol. 79(3), pages 482-503, June.
    8. John Bound & Michael Schoenbaum & Timothy Waidmann, 1995. "Race and Education Differences in Disability Status and Labor Force Attachment," NBER Working Papers 5159, National Bureau of Economic Research, Inc.
    9. John Bound & Timothy Waidmann, 1992. "Disability Transfers, Self-Reported Health, and the Labor Force Attachment of Older Men: Evidence from the Historical Record," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(4), pages 1393-1419.
    10. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    11. Ilmakunnas, Seija & Pudney, Stephen, 1990. "A model of female labour supply in the presence of hours restrictions," Journal of Public Economics, Elsevier, vol. 41(2), pages 183-210, March.
    12. repec:bla:econom:v:49:y:1982:i:193:p:81-91 is not listed on IDEAS
    13. Marcel Kerkhofs & Maarten Lindeboom, 1995. "Subjective health measures and state dependent reporting errors," Health Economics, John Wiley & Sons, Ltd., vol. 4(3), pages 221-235, May.
    14. Pencavel, John, 1987. "Labor supply of men: A survey," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 1, pages 3-102, Elsevier.
    15. Hajivassiliou, Vassilis Argyrou, 1986. "Two misspecification tests for the simple switching regressions disequilibrium model," Economics Letters, Elsevier, vol. 22(4), pages 343-348.
    16. Sickles, Robin C & Taubman, Paul, 1986. "An Analysis of the Health and Retirement Status of the Elderly," Econometrica, Econometric Society, vol. 54(6), pages 1339-1356, November.
    17. Jonathan S. Leonard, 1985. "Labor Supply Incentives and Disincentives for the Disabled," NBER Working Papers 1744, National Bureau of Economic Research, Inc.
    18. Unknown, 1986. "Letters," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 1(4), pages 1-9.
    19. Alan Duncan & Melvyn Weeks, "undated". "Non-Nested Models of Labour Supply with Discrete Choices," Discussion Papers 97/20, Department of Economics, University of York.
    20. Zabalza, Antoni, 1983. "The CES Utility Function, Non-Linear Budget Constraints and Labour Supply: Results on Female Participation and Hours," Economic Journal, Royal Economic Society, vol. 93(37), pages 312-330, June.
    21. Orme, Chris, 1990. "The small-sample performance of the information-matrix test," Journal of Econometrics, Elsevier, vol. 46(3), pages 309-331, December.
    22. Stern, Steven, 1996. "Semiparametric estimates of the supply and demand effects of disability on labor force participation," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 49-70.
    23. Gourieroux, Christian & Monfort, Alain & Renault, Eric & Trognon, Alain, 1987. "Generalised residuals," Journal of Econometrics, Elsevier, vol. 34(1-2), pages 5-32.
    24. John Bound, 1991. "Self-Reported Versus Objective Measures of Health in Retirement Models," Journal of Human Resources, University of Wisconsin Press, vol. 26(1), pages 106-138.
    25. Lee, Lung-Fei, 1982. "Health and Wage: A Simultaneous Equation Model with Multiple Discrete Indicators," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 23(1), pages 199-221, February.
    26. Heckman, James J, 1993. "What Has Been Learned about Labor Supply in the Past Twenty Years?," American Economic Review, American Economic Association, vol. 83(2), pages 116-121, May.
    27. Disney, Richard & Webb, Steven, 1991. "Why Are There So Many Long Term Sick in Britain?," Economic Journal, Royal Economic Society, vol. 101(405), pages 252-262, March.
    28. Euwals, Rob & van Soest, Arthur, 1999. "Desired and actual labour supply of unmarried men and women in the Netherlands," Labour Economics, Elsevier, vol. 6(1), pages 95-118, March.
    29. Anderson, Kathryn H. & Burkhauser, Richard V., 1984. "The importance of the measure of health in empirical estimates of the labor supply of older men," Economics Letters, Elsevier, vol. 16(3-4), pages 375-380.
    30. Eggink, E & Hop, J P & van Praag, Bernard M S, 1994. "A Symmetric Approach to the Labour Market with the Household as the Unit of Observation," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 9(2), pages 133-161, April-Jun.
    31. Steven Stern, 1989. "Measuring the Effect of Disability on Labor Force Participation," Journal of Human Resources, University of Wisconsin Press, vol. 24(3), pages 361-395.
    32. Poirier, Dale J., 1980. "Partial observability in bivariate probit models," Journal of Econometrics, Elsevier, vol. 12(2), pages 209-217, February.
    33. repec:bla:econom:v:53:y:1986:i:211:p:379-91 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Melissa Bjelland, 2005. "Are the Lasting Effects of Employee-Employer Separations induced by Layoff and Disability Similar? Exploring Job Displacement using Survey and Administrative Data," Longitudinal Employer-Household Dynamics Technical Papers 2005-03, Center for Economic Studies, U.S. Census Bureau.
    2. Umut Oguzoglu, 2011. "Severity of Work Disability and Work," The Economic Record, The Economic Society of Australia, vol. 87(278), pages 370-383, September.
    3. Ricardo Pagán & Andrés J. Marchante, 2004. "Análisis de las diferencias salariales por discapacidad en España: el caso de los varones," Hacienda Pública Española / Review of Public Economics, IEF, vol. 171(4), pages 75-100, december.
    4. Brent Kreider & John Pepper, 2008. "Inferring disability status from corrupt data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(3), pages 329-349.
    5. Kidd, Michael P. & Sloane, Peter J. & Ferko, Ivan, 2000. "Disability and the labour market: an analysis of British males," Journal of Health Economics, Elsevier, vol. 19(6), pages 961-981, November.
    6. Jones, Melanie K. & Latreille, Paul L. & Sloane, Peter J., 2007. "Disability and Work: A Review of the British Evidence," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 25, pages 473-498, Abril.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:eee:labchp:v:3:y:1999:i:pc:p:3309-3416 is not listed on IDEAS
    2. repec:eee:labchp:v:3:y:1999:i:pc:p:3417-3528 is not listed on IDEAS
    3. Sergi Jiménez-Martín & José M. Labeaga & Cristina Vilaplana Prieto, 2006. "Award errors and permanent disability benefits in Spain," Economics Working Papers 966, Department of Economics and Business, Universitat Pompeu Fabra.
    4. David Madden & Ian Walker, 1999. "Labour Supply, Health and Caring - Evidence from the UK," Working Papers 199928, School of Economics, University College Dublin.
    5. Lixin Cai & Guyonne Kalb, 2004. "Health Status and Labour Force Participation: Evidence from the HILDA Data," Melbourne Institute Working Paper Series wp2004n04, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    6. Mary C. Daly & John Bound, 1995. "Worker Adaptation and Employer Accommodation Following the Onset of a Health Impairment," NBER Working Papers 5169, National Bureau of Economic Research, Inc.
    7. Deschryvere, Matthias, 2004. "Health and Retirement. An Update of the Literature," Discussion Papers 932, The Research Institute of the Finnish Economy.
    8. Kreider, Brent & Pepper, John V., 2007. "Disability and Employment: Reevaluating the Evidence in Light of Reporting Errors," Journal of the American Statistical Association, American Statistical Association, vol. 102, pages 432-441, June.
    9. Brent Kreider & John Pepper, 2008. "Inferring disability status from corrupt data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(3), pages 329-349.
    10. Rolf Aaberge & Ugo Colombino, 2014. "Labour Supply Models," Contributions to Economic Analysis, in: Handbook of Microsimulation Modelling, volume 127, pages 167-221, Emerald Group Publishing Limited.
    11. Bessho, Shun-ichiro & Hayashi, Masayoshi, 2011. "Labor supply response and preferences specification: Estimates for prime-age males in Japan," Journal of Asian Economics, Elsevier, vol. 22(5), pages 398-411, October.
    12. Barbara Hanel, 2010. "Disability Pensions and Labor Supply," Working Papers 086, Bavarian Graduate Program in Economics (BGPE).
    13. Burkhauser, Richard V. & Butler, J. S. & Gumus, Gulcin, 2003. "Dynamic Modeling of the SSDI Application Timing Decision: The Importance of Policy Variables," IZA Discussion Papers 942, Institute of Labor Economics (IZA).
    14. Bound, John & Stinebrickner, Todd & Waidmann, Timothy, 2010. "Health, economic resources and the work decisions of older men," Journal of Econometrics, Elsevier, vol. 156(1), pages 106-129, May.
    15. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695, Elsevier.
    16. Stern, Steven, 1996. "Semiparametric estimates of the supply and demand effects of disability on labor force participation," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 49-70.
    17. Lixin Cai & Guyonne Kalb, 2007. "Health status and labour force status of older working-age Australian men," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 10(4), pages 227-252.
    18. Maarten Lindeboom & Marcel Kerkhofs, 2004. "Subjective Health Measures, Reporting Errors and Endogeneity in the Relationship Between Health and Work," CEIS Research Paper 46, Tor Vergata University, CEIS.
    19. Shun-ichiro Bessho & Masayoshi Hayashi, 2005. "The CES utility function, non-linear budget constraints and labor supply : results on prime-age males in Japan," Labor Economics Working Papers 21911, East Asian Bureau of Economic Research.
    20. Meyer, Bruce D. & Mok, Wallace K.C., 2019. "Disability, earnings, income and consumption," Journal of Public Economics, Elsevier, vol. 171(C), pages 51-69.
    21. John Bound & Michael Schoenbaum & Timothy Waidmann, 1995. "Race and Education Differences in Disability Status and Labor Force Attachment," NBER Working Papers 5159, National Bureau of Economic Research, Inc.
    22. Lixin Cai & Guyonne Kalb, 2006. "Health status and labour force participation: evidence from Australia," Health Economics, John Wiley & Sons, Ltd., vol. 15(3), pages 241-261, March.

    More about this item

    Keywords

    Disability; Work Capacity; Employment; Labour Supply; Partial Observability; Reporting Errors;
    All these keywords.

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ukc:ukcedp:9813. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr Anirban Mitra (email available below). General contact details of provider: https://www.kent.ac.uk/economics/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.