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Disability, discrimination, and the effectiveness of wage subsidies: A job-search approach

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  • Charles Bellemare
  • Ibrahima Sory Aissatou Diallo
  • Marion Goussé

Abstract

In this paper we develop and estimate a job search model with matching and bargaining in the presence of employer taste-based discrimination. The model is estimated using a longitudinal panel data from Canada’s Survey of Labour and Income Dynamics (SLID). Estimates suggest that employer discrimination and individual labour costs explain the majority of labour market disparities between persons living with and without disabilities. We use our model to estimate several counterfactuals. We find that implementing a hiring wage subsidy policy could increase the employment rate of persons with disabilities by 7 percentage points. Eliminating discrimination, on the other hand, would have an even greater impact, raising the employment rate by 14 percentage points for men, and 19 percentage points for women. Combining both measures — removing discrimination and introducing a hiring wage subsidy — would lead to an employment rate increase of 20 percentage points for men, and 24 percentage points for women. This combined approach would significantly reduce the existing employment rate gap between persons with and without disabilities. In particular, the employment rate gap is predicted to fall to 33 percentage points for men (relative to 53 percentage points in the data) and to 13 percentage points for women (relative to 39 percentage points in the data). Dans cet article, nous développons et estimons un modèle de recherche d'emploi avec appariement et négociation en présence d'une discrimination fondée sur les préférences de l'employeur. Le modèle est estimé à l'aide d'un panel de données longitudinales provenant de l'Enquête sur la dynamique du travail et du revenu (EDTR) du Canada. Les estimations suggèrent que la discrimination de l'employeur et les coûts individuels du travail expliquent la majorité des disparités sur le marché du travail entre les personnes handicapées et non handicapées. Nous utilisons notre modèle pour estimer plusieurs scénarios contrefactuels. Nous constatons que la mise en œuvre d'une politique de subvention salariale à l'embauche pourrait augmenter le taux d'emploi des personnes handicapées de 7 points de pourcentage. L'élimination de la discrimination, quant à elle, aurait un impact encore plus important, augmentant le taux d'emploi de 14 points de pourcentage pour les hommes et de 19 points de pourcentage pour les femmes. La combinaison des deux mesures - élimination de la discrimination et introduction d'une subvention salariale à l'embauche - entraînerait une augmentation du taux d'emploi de 20 points de pourcentage pour les hommes et de 24 points de pourcentage pour les femmes. Cette approche combinée réduirait de manière significative l'écart de taux d'emploi existant entre les personnes handicapées et non handicapées. En particulier, l'écart de taux d'emploi devrait tomber à 33 points de pourcentage pour les hommes (par rapport à 53 points de pourcentage dans les données) et à 13 points de pourcentage pour les femmes (par rapport à 39 points de pourcentage dans les données).

Suggested Citation

  • Charles Bellemare & Ibrahima Sory Aissatou Diallo & Marion Goussé, 2025. "Disability, discrimination, and the effectiveness of wage subsidies: A job-search approach," CIRANO Working Papers 2025s-04, CIRANO.
    • Handle: RePEc:cir:cirwor:2025s-04
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    File URL: https://cirano.qc.ca/files/publications/2025s-04.pdf
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    References listed on IDEAS

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    Keywords

    Disability; discrimination; Job search models; Wage subsidies; Handicap; discrimination; Modèles de recherche d'emploi; Subventions salariales;
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