Using Statistics Canada’s 2001 Participation and Activity Limitation Survey (PALS) we examine the impact of disability on the annual earnings and labour force participation of Canadian men and women. Our estimates show large earnings penalties associated with disability ranging from 21 percent for mild disabilities to over 50 percent for very severe disabilities. We also find that disability is associated with a 30 percentage point reduction in labour force participation Our estimates of the impact of disability are comparable to other studies for more severe disability but our estimates of the impact of milder disabilities are substantially and significantly larger. This difference likely reflects improvements in the PALS design over previous Canadian surveys in accurately identifying mild disability versus non-disability. It is also a possibility that over the economic expansion of the 1990s, disabled individuals in the Canadian labour market fell behind their able bodied counterparts
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Paper provided by Department of Economics, University of Calgary in its series Working Papers with number
2008-26.
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