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Disabilities, Mandatory Worksite Modifications, and Employment: Some Potential Policy Dilemmas

Author

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  • Paul R. Flacco

    (Chinese University of Hong Kong)

  • Lester A. Zeager

    (East Carolina University)

Abstract

This article considers the impact of mandatory worksite modifications for handi- Abstract capped workers on optimal employment at the competitive firm. The authors argue that worker impairments introduce production uncertainty, and they demonstrate that for firms with decreasing absolute risk aversion, mandatory worksite modifications reduce the optimal employment level. Simulation exercises suggest that the employment reduction could be substantial, particularly in smaller firms. They also show that by using appropriately coordinated tax policies, the undesirable employ ment effect of mandatory worksite modifications can be mitigated. However, if the government relies on these policies to eliminate the effect entirely, firms lose any incentive to minimize modification costs.

Suggested Citation

  • Paul R. Flacco & Lester A. Zeager, 1992. "Disabilities, Mandatory Worksite Modifications, and Employment: Some Potential Policy Dilemmas," Public Finance Review, , vol. 20(2), pages 256-270, April.
    • Handle: RePEc:sae:pubfin:v:20:y:1992:i:2:p:256-270
    DOI: 10.1177/109114219202000208
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    References listed on IDEAS

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    5. Robert Haveman & Barbara Wolfe & Fung Mey Huang, 1989. "Disability Status as an Unobservable: Estimates From a Structural Model," NBER Working Papers 2831, National Bureau of Economic Research, Inc.
    6. Batra, Raveendra N., 1974. "Resource allocation in a general equilibrium model of production under uncertainty," Journal of Economic Theory, Elsevier, vol. 8(1), pages 50-63, May.
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