Employment Quota System and Labour Market Outcomes of Individuals with Disabilities: Empirical Evidence from South Korea

Abstract

To date, only a few studies have attempted to evaluate the effectiveness of disability employment quota systems using structural changes in policies. This study exploits the structural changes in South Korea's disability employment quota system that took place in 2004 and 2006 to expand the current disability policy evaluation literature. We separate the effect of these changes in the quota system into their effect on the probability of labour force participation and their effect on the probability of employment (after controlling for selection into the labour market). We also study the extent to which the changes -which included increasing the number of employers covered by the quota system, the number of jobs available to individuals *Submitted November 2013. This study has been funded in part by the K. Lisa Yang Gift Fund to the Employment and Disability Institute in the Cornell University ILR (Industrial and Labor Relations) School.Keywords: disability employment quota system, labour market, disability, labour force participation, employment, job satisfaction, binary response model with sample selection. JEL classification numbers: J2, J7, J28, J48. 100Fiscal Studies with disabilities and the financial incentives for employing individuals with disabilities -have affected job satisfaction among individuals with disabilities. Our results suggest that the changes in the quota system may have increased labour force participation but have had a limited positive impact on the probability of employment among people with disabilities in South Korea. Further, compulsory hiring and expanded opportunities have not substantially affected the level of job satisfaction observed among employees with disabilities relative to their non-disabled counterparts. Policy points• Using the structural changes in South Korea's disability employment quota system between 2004 and 2006 targeted at increasing the number of employers covered by the quota system, the number of jobs available to individuals with disabilities and the financial incentives for employing individuals with disabilities, we investigate the effect of new policy initiatives on various labour market outcomes of the targeted group of individuals relative to non-disabled counterparts.• Our results suggest that the new initiatives may have increased labour force participation but have had a limited positive impact on the probability of employment among people with disabilities in South Korea.• The new initiatives have not substantially affected the level of job satisfaction observed among employees with disabilities relative to their non-disabled counterparts.• As the US and other developed countries consider their own disability employment situations, they can learn from studies such as this one on the effectiveness of quota systems.

A Systematic Literature Review of the Barriers to Job Placement for Person with Disabilities

“…This could be done by imposing regulations that would prevent and minimize employers' discriminatory human resource practices such as in hiring disabled candidates (39). Forced quota system (40) may also improve the employment of person with disabilities, which has been successful in South Korea (41). Educated and informed employers are possibly more likely to offer employment opportunities that are suitable for person with disabilities.…”

Labor market impacts of employment quotas for the disabled in Brazil

“…Other studies suggest positive but tiny impacts. In South Korea, changes in the employment quota system that took place in 2003 have shown to increase labor force participation, but have had a limited positive impact on the probability of employment among people with disabilities (Nazarov et al 2015). A main concern is whether the penalty for non-compliance provides sufficient incentives for firms to hire disabled workers.…”

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

“…Research demonstrates that the quota system increases the employment of disabled people in Austria (Lalive et al 2013, Wuellrich 2010 and Japan (Mori & Sakamoto 2018). Malo & Pagán (2014) finds a small positive, marginally significant effect for Spain and Nazarov et al (2015) conclude that the policy has only a limited impact on the employment of disabled individuals in South Korea.…”