Focus And Strategy Of Analyses

This book is concerned with the labor market implications and impact of the ADA. In addition to the multiple dimensions of the potential effect of the ADA on disabled workers, there are at least as many more ways in which the ADA influences the lives of all disabled Americans; these other outcomes are not the subject of the present discussion, but may in fact amount to a much greater overall impact than that felt by the disabled in the labor market. The strategy of analysis followed here for documenting the impact of the ADA on the labor market experience of disabled workers has been to assemble as much information on as many dimensions of that experience as possible. The major contribution of the analyses that follow is the wideranging coverage and synthesis of a massive amount of information in such a way as to make recommendations for policy. The emphasis has not been on developing new ways to examine the labor market experience of the disabled, but to broaden that examination.

The focus is on labor demand issues, defining the environment that the disabled might face. As a result, the analyses of employment and wages, for example, will correspond to what a disabled person might encounter upon entering the labor market. The conclusions will not be conditional on the labor supply decisions of the disabled, but will take those decisions into account in presenting unconditional results that apply to the population of the disabled, instead of merely to the sample (of workers) on which the estimates are obtained. Other analyses, such as the incidence of voluntary part-time employment, job separation, or job search experience, will be generalizable only to that population for which the issues are relevant: the part-time employed, the employed only, or the unemployed only. These sample limitations are legitimate and logical given the population for which such questions are relevant.

It is important to remember that the purpose of the labor market provisions of the ADA was to break down barriers to the disabled and to improve their experiences in the labor market. Although perhaps expected, the alteration of various voluntary behaviors (such as labor force participation) was not the goal of these provisions. A fair analysis of the ADA should only involve an evaluation of what it was designed to do. Regardless of its intent, however, any policy can have unintended consequences that should also be addressed.

Outline of the Book

Chapter 2 explores employment outcomes among the disabled. Both joint labor force and employment and unconditional employment probabilities are examined for the entire sample of disabled individuals, controlling for selection into the labor force. The availability of firm size and the phased-in nature of the ADA are exploited in a differ-ences-in-differences analysis. Results by type of disability are also presented. The joint labor force participation and employment proba bility for disabled persons declined relative to this joint outcome among nondisabled individuals after the ADA was implemented. However, the unconditional (i.e., controlling for selection into the labor market) employment probability did not change post-ADA, relative to the experience of the nondisabled. The source of the deteriorating joint outcome is explored in some depth. In addition, employment among the disabled was found to shift more toward larger firms than did employment among nondisabled workers, suggesting that implementation of the ADA and the financial ability (of larger firms) to accommodate workers' disabilities mattered in the employment experience of disabled workers.

Chapter 3 looks at the wages earned by disabled and nondisabled workers. A pooled, cross-sectional analysis suggests that wages among disabled workers fell post-ADA, relative to wages among the nondis-abled. In addition, a standard decomposition of the wage differential observed between disabled and nondisabled workers is performed. The availability of benefits is also explored through a simple probit analysis. While the overall compensation experience of disabled workers is found to be deteriorating relative to nondisabled workers (in both wages and availability of employer-sponsored fringe benefits), the degree to which discrimination might be used to explain this differential is also declining. It is found, however, that wages of disabled workers explicitly covered by the ADA (based on the size of their employers) have not changed post-ADA, relative to their noncovered counterparts, suggesting the overall lower wages among the disabled are being driven by more than accommodation costs.

A number of job quality issues are addressed in Chapter 4. First, hours of work and the incidence of part-time employment and type of part-time employment among disabled and nondisabled workers are explored. Second, the distribution of workers across occupations and industries is compared using a popular distributional index. Third, the representation of disabled workers in high-growth and high-wage jobs is evaluated. This chapter presents evidence that while the incidence of part-time employment is increasing for disabled workers, relative to nondisabled workers, the incidence of voluntary part-time employment is driving that increase, particularly among workers with mental disorders. The degree of dissimilarity and the growth in dissimilarity in occupation and industry distributions of disabled and nondisabled workers over the 1981-2000 period are striking. While showing some improvement since 1992, this is of concern since disabled workers also appear to be concentrated in low-growth, low-wage occupations.

Job separation and unemployment experiences of the disabled are explored in Chapter 5. Results from a multinomial logit find that, among individuals who have separated from their job, disabled workers are more likely to have separated voluntarily and less likely to have separated involuntarily than nondisabled workers. A similar analysis then finds that, among the unemployed, disabled workers are more likely to be reentrants and new entrants into the labor market than nondisabled workers. A duration analysis shows that disabled job seekers are searching on average three weeks longer before finding a job than similar nondisabled persons, and that most of the difference in observed search length is explained by differences in individual characteristics. Taken together, these results suggest that while the endowments or characteristics of disabled and nondisabled workers appear to be valued equally, employers may be going to greater lengths to discern the fit of a disabled worker's skill set with a particular job, thus leading to longer searches, a better match, and less chance that a separation is for involuntary reasons.

Chapter 6 explores the impact of state-level legislation on wages, employment, and hours of disabled workers in different states. The analyses in this chapter exploit the differential timing of protective legislation across a number of states. The results are consistent and support the findings from Chapters 2, 3, and 4 on these same issues. Namely, wages decline and overall employment probabilities are unchanged among disabled workers, post-legislation, relative to nondis-abled workers. In addition, part-time employment among disabled workers increases post-legislation. These results suggest that the wage and part-time employment effect of the ADA may have been much greater if the state legislation had not already absorbed some if its potential impact.

Chapter 7 synthesizes the results of the previous chapters around policy implications and recommendations. It is suggested that three directions be followed to further enhance the labor market experience of disabled workers: 1) provide incentives to the disabled to enter the labor force and relief to employers for the cost of accommodating these individuals; 2) expand the support of resources available for disabled workers to increase their general human capital and ability to move into high-paying occupations; and 3) provide mechanisms by which employers and disabled workers can find each other and determine the appropriateness of the employment match.

Data Details and Estimation Issues

The combined Current Population Survey (CPS) Annual Earnings files for the months of March, April, May, and June, for the years 1981 through 2000, were used to obtain demographic data, employment status, earnings, details related to the respondent's job, and location information to control for local labor market conditions. These CPS Annual Earnings files were matched with the March CPS survey for each year to obtain data on disability status, other sources of income, and labor market information available for the previous year. This strategy resulted in a sample four times larger than any single month of current labor market statistics, yielding greater confidence in the precision of the results.

Some have questioned whether self-reported disability status (as in the CPS) suffers from endogeneity (e.g., Parsons 1980; Haveman and Wolfe 1984). For example, it may be the case that someone less likely to enter the labor market or to be employed is also more likely to report the presence of a disability (i.e., the disability indicator and error term of the regression are not independent). Stern (1989) finds that ''any bias due to potential endogeneity is small'' (p. 363). Of course, endogeneity may be more of a concern since the passage of the ADA. As will be addressed in Chapter 2, endogeneity among the population as a whole may be a greater problem than among only labor force participants (also see Kreider 1999). Additional criticism has been lobbed at the use of the traditional ''work disability'' measure contained in the CPS for drawing conclusions about the overall experience of the disabled or the effectiveness of the ADA. Some argue that requiring a disability to be ''work limiting'' can be too narrow (Kruse and Schur 2002; McNeil 2000). Others contend that not appropriately defining what a work-limiting disability is results in too broad of an inclusion of respondents (Hale 2001 and Kirchner 1996). Yet, others provide evidence supporting the representative nature of the CPS for monitor ing outcomes among the disabled (Burkhauser, Daly, and Houtenville 2001). It is because of this controversy that confirmatory evidence of the CPS results is sought from an additional data source. Regardless, the reader should be aware that this book makes use of ''work-limiting disability'' as the identifier of a disabled person. In addition, it is expected that when focusing on labor market outcomes, those who report a work-limiting disability are the most likely to feel the greatest impacts of the ADA, should they exist.

Table 1.1 reports the potential sample sizes for each year obtained from the CPS. Actual sample sizes for each analysis may differ because of missing data or the use of specific subsamples (e.g., the unemployed only).6 While the sample sizes vary somewhat from year to year, the proportion of disabled to nondisabled remains fairly constant, and most analyses benefit from roughly 1,500 disabled workers and 50,000 nondisabled workers.

Table 1.1 Sample Sizes for Merged CPS Data Files

Disabled

Nondisabled

Labor force

Labor force

Year

Total

All

participants

Employed

All

participants

Employed

1981

100,291

9,818

2,022

1,744

90,473

60,873

56,656

1982

94,351

9,617

1,962

1,661

84,734

57,006

52,015

1983

93,720

9,119

1,788

1,490

84,601

56,606

51,114

1984

94,683

9,654

1,922

1,661

85,029

57,591

53,507

1985

95,075

9,832

1,931

1,648

85,243

58,111

54,192

1986

90,341

8,931

1,848

1,581

81,410

55,604

51,935

1987

88,507

8,513

1,805

1,560

79,994

54,829

51,591

1988

85,371

7,811

1,697

1,493

77,560

52,258

49,625

1989

85,224

7,913

1,713

1,533

77,311

53,364

50,789

1990

93,625

8,745

1,919

1,692

84,880

58,896

56,005

1991

92,958

8,681

1,833

1,598

84,277

58,172

54,558

1992

90,520

8,547

1,913

1,614

81,973

56,617

52,779

1993

90,056

8,842

1,950

1,684

81,214

55,926

52,316

1994

88,674

9,709

1,810

1,602

78,965

55,341

52,246

1995

77,674

8,654

1,507

1,336

69,020

48,217

45,775

1996

77,188

8,396

1,535

1,379

68,792

48,356

45,892

1997

78,322

8,418

1,609

1,456

69,904

49,437

47,112

1998

77,583

7,796

1,468

1,332

69,787

49,403

47,370

1999

77,487

7,625

1,392

1,266

69,862

49,406

47,542

2000

79,242

7,917

1,488

1,358

71,325

50,825

48,999

Since the ADA (and similar legislation) was designed to improve the labor market conditions of a group of workers, the analyses presented here will be almost purely cross-sectional. The result is a comprehensive comparison of the labor market experiences of one group of workers (the disabled) with that of another group of workers (the nondisabled). When making comparisons across groups of people, there will surely always be exceptions to the norm. It is important to recognize, however, that policy is rarely designed around exceptions. The use of individual data in the analyses does allow for control of identifiable individual characteristics (other than the group-defining characteristic of being disabled) in the determination of workers' experiences. The premise, of course, is that identical disabled and nondis-abled workers should have the same labor market experience. This presupposition, which holds in making any comparisons across groups of workers (i.e., men versus women, or blacks versus whites), is more problematic in making comparisons across disability status; there are likely more unobservable characteristics across disability status than, for example, across gender. In addition, since most of the analyses consider the experience of those in the labor market, or at least control for selection into the labor market, no restriction is imposed on age.7

For each of the analyses, it is important to distinguish any changes in outcomes that might have resulted from the enactment of the ADA from any long-term trend. In other words, changes in the labor market experiences of workers with disabilities may reflect an evolving social awareness that culminated in the passage of the ADA, rather than the other way around. Consequently, this book documents labor market outcomes from 1981 through 2000.8 In addition, since a major overhaul of the CPS questionnaire was undertaken in 1994, care is taken to differentiate any ADA impact from a potential statistical artifact (see Polivka 1996).

Also, due to the complicated matching across one to four months of the CPS, all analyses have been performed unweighted. According to Wooldridge (1999), ''stratification based on exogenous variables does not cause any problems: estimators that ignore the stratification are consistent and asymptotically normal, and the usual variance matrix estimators are consistent'' (p. 1386). Since stratification in the CPS sampling design is based on exogenous variables (geographic and demographic), and the attrition that results from the matching procedure is likely unsystematic, weights should be unnecessary (for further evidence on this point, see DuMouchel and Duncan 1983; Manski and McFadden 1981). In addition, any effect of stratification on the estimation can be accounted for by including indicator variables that correspond to the strata (Ginther and Hayes 2001), so demographic variables (such as disability status) should control for any observable effect sampling based on those characteristics might have (either initially or through attrition of matching). Any systematic attrition or sample loss due to unobservables will not be accounted for, but also cannot be corrected using weights.

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