The labour effect of a Disability Act. Longitudinal evidence from Chile

Abstract

In February of 2010 a Law on Equal Opportunities and Social Inclusion of Persons with Disabilities, the Law N. 20.422, was enacted in Chile. One of the aims of this reform was to improve the labour inclusion for the people from this group, but until now there is still no evidence that supports the fulfillment of that objective. In that line, by analyzing longitudinal data from the Chilean Social Protection Survey we find that the Law N. 20.422 had no significant labour effects in the short term and that it implied mid term negative impacts on the labour force participation and the employment rate of the working age persons with disabilities in the country. The latter holds even after controlling for the increasing trend of individuals receiving disability benefits, for individuals’ unobserved heterogeneity and for the potential dynamic effects of labour state dependence.