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The Impact of Work‐Limiting Disability on Labor Force Participation

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  • Douglas A. Webber
  • Melissa J. Bjelland

Abstract

According to the justification hypothesis, non‐employed individuals may over‐report their level of work limitation, leading to biased census/survey estimates of the prevalence of severe disabilities and the associated labor force participation rate. For researchers studying policies which impact the disabled or elderly (e.g., Supplemental Security Income, Disability Insurance, and Early Retirement), this could lead to significant bias in key parameters of interest. Using the American Community Survey, we examine the potential for both inflated and deflated reported disability status and generate a general index of disability, which can be used to reduce the bias of these self‐reports in other studies. We find that at least 4.8 million individuals have left the labor force because of a work‐limiting disability, at least four times greater than the impact implied by our replication of previous models. Copyright © 2013 John Wiley & Sons, Ltd.

Suggested Citation

  • Douglas A. Webber & Melissa J. Bjelland, 2015. "The Impact of Work‐Limiting Disability on Labor Force Participation," Health Economics, John Wiley & Sons, Ltd., vol. 24(3), pages 333-352, March.
    • Handle: RePEc:wly:hlthec:v:24:y:2015:i:3:p:333-352
    DOI: 10.1002/hec.3020
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    2. Kostas Mavromaras & Joanne Flavel, 2017. "An Analysis of the Impact of Health on Occupation," The Economic Record, The Economic Society of Australia, vol. 93, pages 86-104, June.
    3. Muhammad Shahdaat Bin Sayeed & Grace Joshy & Ellie Paige & Emily Banks & Rosemary Korda, 2021. "Cardiovascular disease subtypes, physical disability and workforce participation: A cross-sectional study of 163,562 middle-aged Australians," PLOS ONE, Public Library of Science, vol. 16(4), pages 1-16, April.
    4. Stijn Baert, 2016. "Wage subsidies and hiring chances for the disabled: some causal evidence," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(1), pages 71-86, January.
    5. Thomas Barnay & Emmanuel Duguet & Yann Videau, 2022. "Did the 2005 French Disabled workers Act increase the employment rate of people with disabilities? An econometric evaluation on panel data," Erudite Working Paper 2022-01, Erudite.
    6. Francisco Perez-Arce & Maria J. Prados & Tarra Kohli, 2018. "The Decline in the U.S. Labor Force Participation Rate," Working Papers wp385, University of Michigan, Michigan Retirement Research Center.
    7. Burcu Düzgün Öncel & Deniz Karaoğlan, 2016. "Disability and Labor Force Participation: Evidence from Turkish Males," ERC Working Papers 1608, ERC - Economic Research Center, Middle East Technical University, revised Aug 2016.

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