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