Working Papers

Early-Onset Disability, Education Investments, and Social Insurance (Job Market Paper) [Link to latest draft ]

Abstract: This paper analyzes the insurance incentive tradeoff of labor market social insurance policy with respect to pre-market human capital investments, focusing on the disparity in post-secondary education attainment between individuals with early-onset disabilities (occurring before age 19) and their non-disabled peers. I develop a dynamic life-cycle model, integrating education and labor supply, to analyze how labor market social insurance policies may contribute to this education gap. Using linked Canadian survey and administrative tax data, I estimate the model and decompose the education gap, highlighting the influence of policy-induced dynamic disincentives. The primary factor contributing to the gap is the impact of disability on human capital development. However, policy-related dynamic disincentives also play a substantial role, accounting for 20% of the educational disparity. Policy experiments suggest that while reducing social insurance benefits may encourage educational pursuits and cut government expenses, it dramatically reduces individual welfare. In contrast, policies aimed at promoting educational investment in individuals with early-onset disabilities, such as consumption subsidies during post-secondary education, enhance their welfare, earnings, and employment prospects. This ultimately counterbalances the initial policy costs.

The Longitudinal Effects of Disability Types on Incomes and Employment  [New Draft!]

 Abstract:  This study examines heterogeneity in the longitudinal effects of disability shocks on various components of personal income, differentiating between types of disabilities based on the productive tasks they impair. Using linked Canadian survey and administrative income tax data, I apply the interaction-weighted estimator, as proposed by Sun and Abraham (2020), to assess and contrast the effects of different disability types in the ten years following their onset. The findings reveal several novel insights. Disabilities that impair physical tasks cause reductions in market income due to labor market exit. This effect is caused by limitations to kinetic ability rather than pain. An increase in non-taxable income, primarily from government transfer programs designed for individuals with disabilities, provides partial insurance for these types. Disabilities that hinder cognitive functions lead to the most substantial decrease in market income and receive only limited long-term support from disability-specific transfer programs. In contrast, disabilities affecting mental health show similar market income impacts as those impairing kinetic abilities. However, this category does not benefit significantly from government transfers, relying instead on some relief through the progressive tax system. A welfare analysis of these findings indicates that the current disability benefits are suboptimal, particularly for mental health-related disabilities [Appendix]

Other Projects

The Labour Market Consequences of Disability: Types, Severity, Persistence, and Onset [Link]

Abstract: This paper analyzes the vast variation in labor market outcomes across disabilities by representing disability as a bundle of characteristics. Rich with information on the characteristics of a disabling condition, I use the Participation and Activity Limitation Survey to compare the relative importance of each characteristic and their interactions on employment, wages, hours worked, and annual employment income. The set of disability characteristics includes the type of activity limitation, number of limitations, timing of onset, severity, and duration. I find substantial cross-sectional variation in labor supply, wages, and annual earnings across the activity limitations. Severity is most predictive of labor supply, while persistence, given by the duration of disability, is predictive of all outcomes. Cognitive types of disabilities have more impact on wages than physical. Lastly, I find the timing of onset has important implications for wages and annual income. My results are consistent with disabilities that onset by age eighteen inflicting additional wage penalties through reduced skill accumulation.