A new approach to understanding labour supply of disabled people

ABSTRACT

The main interest of this article is to propose an individual utility maximization model to explain the low participation of disabled people. We account for heterogeneity of preferences and furthermore time of self-caring for disabled individuals is considered as an argument in the utility function. The hours of work decided by disabled individuals are neither homogeneous (they depend on unknown characteristics) nor continuous (discrete choice sets). We use data of 4790 households from the Spanish Survey of Disability, Personal Autonomy and Dependency and find association between time of informal care and labour participation and, consequently, the choice between jobs.

KEYWORDS:

• Disability
• informal care
• labour supply hours
• nested logit model

JEL CLASSIFICATION:

• J20
• I20
• I30

Acknowledgements

The authors wish to acknowledge two anonymous referees for their very helpful comments and suggestions. The authors also gratefully acknowledge financial support from the Programa Estatal de Fomento de la Investigación Científica y Técnica de Excelencia/Spanish Ministry of Economy and Competitiveness. Ref. ECO2016-76203-C2-1-P. In addition, this work is part of the Research Project APIE 1/2015-17: ‘New methods for the empirical analysis of financial markets’ of the Santander Financial Institute (SANFI) of UCEIF Foundation resolved by the University of Cantabria and funded with sponsorship from Banco Santander.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ He proposed a discrete choice framework in which the agent’s choice problem is based on the choice among feasible jobs and the distribution of desired working hours is discrete due to the choice opportunities distribution.

² For more details of this type of modelling, see Dagsvik and Strom (2004).

³ Three surveys have been carried out: the Survey on Disabilities, Deficiencies and Disabilities (EDDM1986), the Survey on Disabilities, Deficiencies and State of Health (EDDS1999) and the Survey on Disability, Personal Autonomy and Dependency Situations (2008).

⁴ In Spain, there is a law based on the integration of Disabled People. This law of Social Integration of disabled people 13/1982 of the 7th of April (LISMI) established that for private and public firms with more than 50 workers, it was compulsory to hire at least a 2% of disabled people. Despite the existence of this regulations, there are very few companies that fulfil the obligation. According to the Academic Network of European Disability Experts, in Spain, only 14% of business larger than 50 workers meet the requirements in 2008.

⁵ We also estimate a multinomial logit in order to compare these two models.

⁶ That can be explained by the direct relation between that variable and the poor health status that reduce welfare. It allows for less time for social relations and maybe more stress, causing less utility for the household in every alternative chosen.

⁷ This may be caused by the fact that disabilities are more frequent in advanced ages and care time is more valued.

Additional information

Funding

This work was supported by the Santander Financial Institute [Grant Number APIE 1/2015-17], Programa Estatal de Fomento de la Investigación Científica y Técnica de Excelencia and Spanish Ministry of Economy and Competitiveness [Ref. ECO2016-76203-C2-1-P].