Do Quotas Work? A Firm’s Perspective on Employing Individuals with Disabilities

Jihye Kam ; Yuseob Lee

Jihye Kam, Sungshin Women’s University, Department of Social Studies Education, South Korea jkam@sungshin.ac.kr
Yuseob Lee, National Assembly Budget Office, Economic Analysis Department, South Korea useuplee@assembly.go.kr

JEL Classification: J14, J23, J78

Abstract

This study examines why firms do not hire people with disabilities despite the mandatory quota and associated levy for unfilled quota. Departing from the conventional regression discontinuity design, we estimate the Tobit and Heckman selection models to explain a firm’s quota compliance. The estimated parameters show firms above the size threshold are more likely to hire more individuals with disabilities. Considering the progressive levy rates for unfilled quota along with estimated marginal effects, we conclude that firms face sizable fixed costs associated with disability employment.

Keywords:

disability, disability employment quota, employment discrimination policy, selection model

Acknowledgments

We thank the conference participants of the Korean Association of Public Finance for their helpful comments and suggestions. All remaining errors are our own. The authors contributed equally to this paper and share corresponding authorship.

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