Disability and job retention: An empirical German household panel study on the effectiveness of disability quotas

This thesis is about the effectiveness of disability quota to increase low employment rates among disabled people. Disability quota systems focus on the underlying mechanisms in the labour market by creating financial incentives for employers to hire disabled workers. This thesis studies a disability quota system in Germany, specifically focussing on job loss after the onset of a health problem. The dataset used for this research consists of 19,505 observations from a German household panel (GSOEP), from the years 2001-2009. A logistic regression analysis was used to study the probabilities to become non-employed for disabled people in firms with and without a quota when experiencing a health shock, controlling for gender, type of occupation, steady partnership, income, education and on-the-job training. The results show evidence that the disability quota in Germany has a positive effect on the probability of job retention after a health shock, having a 2.36 %-points lower probability to become non employed when experiencing a health problem compared to workers employed in a firm without a disability quota. The effect was stronger for medium-sized companies (rather than large companies) and white-collar-workers (rather than blue-collar workers). Further research is necessary to provide evidence on the effectiveness of the disability quota. Good understanding of the functioning of the disability quota system will benefit the position of disabled people on the labour market. Furthermore, it would be interesting to study the impact of the levy size.