Do wage subsidies for disabled workers reduce their non-employment? - evidence from the Danish Flexjob scheme

Abstract

We evaluate the potential of wage subsidy programs for reducing non-employment of the disabled by exploiting a reform of the Danish Flexjob scheme targeted towards employing the long-term (partially) disabled. Firms received a salary reimbursement for all employees granted a Flexjob. We examine whether a change from full to partial reimbursement to governmental units affected the share of Flexjobs allocated to retained (insiders) versus non-employed hirees (outsiders). After the reform, the composition of hires changed substantially in favor of insiders, both in absolute and relative terms. A reduction in subsidies thus leads to a decrease in the hiring of the non-employed disabled. JEL Codes: I38, J14, C21

The Effects of a Disability Employment Quota When Compliance is Cheaper than Defiance

“…Contrary to the quota system which punishes noncompliance, all these policies operate by decreasing the relative wage cost of disadvantaged groups. Empirical evidence on wage subsidies is mixed: while there is some evidence that wage subsidies can be effective in enhancing the employment rate of people with disabilities (Datta Gupta et al 2015) and disadvantaged unemployed (Kluve 2010), other papers find that wage subsidies have modest effects (Katz 1998, Hamersma 2008, or no effect at all (Baert 2016). This paper contributes by showing that other factors beyond labor demand elasticity, such as labor supply constraints and labor market frictions might have a great influence on employment outcomes.…”

Untitled

“…Differences-in-Differences). Šis metodas taip pat plačiai taikomas moksliniuose tyrimuose vertinant valstybės pagalbą (Bell ir Heitmueller, 2009;Bondonio ir Greenbaum, 2014;Briglauer, Dürr, Falck ir Hüschelrath, 2019;Datta Gupta, Larsen ir Thomsen, 2015;Jiménez-Martín, Juanmartí Mestres ir Vall Castelló, 2019;Midtsundstad ir Nielsen, 2016)the employment provision of the 1996 Disability Discrimination Act (DDA. Pagrindinis šio metodo principasdviejų skirtingų grupių stebėjimas.…”

Disabled People, Work and Welfare

“…Those who are eligible for, but are waiting to join the scheme, receive an unemployment allowance equivalent to UI benefit, averaging around 80-90% of the highest rate of daily social security benefits. In 2011, 70,000 people were employed in flex-jobs, half in the public sector and half in the private sector (Gupta et al, 2013). Municipalities also operate a sheltered employment scheme for people with more severe disabilities.…”