Disability and Job Constraint in Post Civil War Cambodia

Abstract

Using an augmented random utility model, we incorporate capability-associated constraints on the set of job choices to identify and estimate the reduced number of jobs due to disabilities – to show that capability disadvantages can be converted to a form of income through the compensation variation denoted as capability-equivalent income. We deliberately chose Cambodia for the empirical analysis, because the civil war and genocide that occurred in the 1970s in the country can be considered a ‘natural shock’. Based on the utility function and the estimated parameters, we simulate the amount of capability-equivalent income of individuals after being compensated for their capability disadvantage by taxing the top earners. We show that after the transfer, the inequality in terms of both income and welfare decreases, and the overall welfare increases.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Supplementary material

Supplementary Materials are available for this article which can be accessed via the online version of this journal available at https://doi.org/10.1080/00220388.2020.1769073.

Notes

1. The set of all alternatives available to the decision-makers. In the random utility modelling literature, it is also called choice set.

2. Section 14 on page 48 of the CSES 2009 questionnaire. Refer to Appendix 2 for the scanned copy of this section.

3. The assumption of i.i.d. rather than a more sophisticated assumption of joint distributions by allowing correlations between jobs, for example, as suggested by Heckman and Honoré (1990) and Keane and Wolpin (1997), is to illustrate how to measure the capability in terms of money metric measures in a clearer way. As we would discuss in the following sections, the coefficients of disabilities are all significant across the three sectors. The simplification of the assumption of i.i.d. would only change the relative ‘disadvantages’ caused by the disabilities across sectors if there is any, but will not change the validity of the conclusions.

4. It is a maxima or minima searching approach. Different from the Newton approach, the quasi-Newton search the stationary point where the gradient is zero without computing the Hessian matrix. We carried this out by using the optim() in R with the method assigned as BFGS.

5. Based on the World Bank Group classification, Cambodia became a lower-middle-income country in 2016.