NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Did the ADA Reduce Employment of the Disabled?

"Apart from a short-term effect of the ADA's requirement of special accommodations, the ADA was not causally linked to declining disabled employment over much of the 1990s."

Congress passed the Americans with Disabilities Act of 1990 (ADA), a law that broadly prohibits discrimination on the basis of disability in employment and other settings, with an unusual degree of political consensus and popular support. Yet evidence suggests that employment levels of individuals with disabilities have declined rather than increased since the ADA's passage. Some commentators have suggested that the relationship is causal: because the ADA's employment protection provisions may increase accommodation and firing costs while doing little to protect workers from discrimination in hiring, the ADA may, paradoxically, be doing more harm than good for the employment prospects of workers with disabilities.

In a recent paper, Disaggregating Employment Protection: The Case of Disability Discrimination (NBER Working Paper No. 10740), NBER Research Associate Christine Jolls and co-author J.J. Prescott use variation in pre-ADA state disability discrimination laws to disentangle the employment effects of the ADA's two main requirements, one of which requires special accommodations for disabled workers, and the other of which imposes a conventional employment protection rule prohibiting firing and other employment decisions based on disability. If in fact the ADA caused declines in disabled employment, then it is important for policy reform purposes to know what category of employment protection is responsible for the negative effect. In a related paper on the ADA, Identifying the Effects of the Americans with Disabilities Act Using State-Law Variation: Preliminary Evidence on Educational Participation Effects (NBER Working Paper No. 10528), Jolls uses the variation in pre-ADA state disability discrimination laws to explore whether -- to the extent certain aspects of the ADA did cause disabled employment to decline just after the law's enactment -- the reduction in employment may be attributed to ADA-generated increases in incentives for schooling or training (that is, human capital accumulation) by individuals with disabilities.

In Disaggregating Employment Protection ... Jolls and Prescott use comprehensive data on pre-ADA state-level legal regimes governing employment discrimination on the basis of disability. Before the ADA, some states had regimes identical to the ADA, under which employers must both provide special accommodations for individuals with disabilities and refrain from making firing and other employment decisions on the basis of disability. Other states prohibited employers from making firing and other employment decisions on the basis of disability but did not require special accommodations for individuals with disabilities. And, a few states did not provide any employment protection to people with disabilities in the pre-ADA period. By comparing employment level changes in states in which certain ADA provisions were innovations to employment level changes in a group of control states that already had such provisions, Jolls and Prescott are able to separate the effects of the ADA's two main requirements.

The authors find no evidence that the ADA's traditional employment protection rule, prohibiting firing and other employment decisions on the basis of disability, reduced disabled employment. This conclusion carries important implications for civil rights and other anti-discrimination laws that, in contrast to the ADA, do not require special accommodations, they suggest. With respect to the ADA's requirement of special accommodations for individuals with disabilities, the authors find a significant negative effect on disabled employment in the period just after the ADA's enactment, but not in the subsequent period. That short-term effect may reflect the fact that many accommodations, including physical alterations to the workplace and modification of workplace policies, imposed obvious but often one-time costs on employers - costs that may well have been exaggerated or particularly salient in employers' minds just after the ADA's enactment. Alternatively, short-term but not medium- and long-term effects may derive from: the ADA's important symbolic effect and the resulting changes in attitudes over time; the possibility that the provision of accommodations ultimately could increase the flow of qualified disabled applicants after a short-term reduction as the disabled individuals responded to the ADA by pursuing more education (a possibility explored more fully by Jolls in ... Preliminary Evidence on Educational Participation Effects); and declining accommodation costs in response to technological changes and judicial refinements of the ADA's requirements.

Jolls and Prescott infer that, apart from a short-term effect of the ADA's requirement of special accommodations, the ADA was not causally linked to declining disabled employment over much of the 1990s. This conclusion, based on the relative effects of the ADA across states with different pre-ADA state-level regimes, stands in contrast to recent empirical work using national-level data. In light of their findings, Jolls and Prescott conclude that that the apparent negative employment effect of the ADA through much of the 1990s plausibly reflects not the impact of the ADA itself, but rather other contemporaneous changes disproportionately affecting individuals with disabilities. Otherwise, the authors suggest, it is not immediately clear why the magnitude of the disabled employment effect after the ADA through much of the 1990s would have no relationship to the degree to which the ADA was a legal innovation in a given state, when the authors find clear evidence of such a relationship in the immediate post-e nactment period.

Jolls also examines educational participation among individuals with disabilities and offers preliminary evidence that it responded positively to the ADA's enactment in states with no pre-ADA restrictions on disability-based discrimination in employment. Individuals with disabilities who were not employed in the years following the ADA's passage were more likely than their pre-ADA counterparts to give educational participation as the reason for their employment status in states in which the ADA was the greatest innovation. Jolls concludes by emphasizing the value of further study, with better education data, of the relationship between the ADA's enactment and disabled educational participation.

-- Les Picker


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