Scandinavian Working Papers in Economics

Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 2014:26: The differential earnings and income effects of involuntary job loss on workers with disabilities

Nikolay Angelov () and Marcus Eliason ()
Additional contact information
Nikolay Angelov: IFAU - Institute for Evaluation of Labour Market and Education Policy, Postal: P O Box 513, SE-751 20 Uppsala, Sweden
Marcus Eliason: IFAU - Institute for Evaluation of Labour Market and Education Policy, Postal: P O Box 513, SE-751 20 Uppsala, Sweden

Abstract: People with disabilities, both in Sweden and elsewhere, are consistently found to face considerable difficulties on the labour market. In this study we have investigated the differential impact of involuntary job loss, on earnings and income, if being disabled. Our main findings are that earnings of those with and without disabilities began to diverge already several years prior to job loss because of a much larger incidence of longer periods of absence due to either sickness or rehabilitation. The seemingly permanent earnings differential following job loss seems to have been a consequence of much more of the job losers with disabilities not returning to employment but instead becoming disability retirees. Although the earnings differential experienced by the job seekers with disabilities was considerable during the post-job loss period, a majority of the difference was replaced by public social insurances.

Keywords: Disability; job loss; unemployment

JEL-codes: J14; J64; J68

32 pages, October 28, 2014

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