Differences in the Returns to Education for Males by Disability Status and Age of Disability Onset

[Author Affiliation]Kevin Hollenbeck, W. E. Upjohn Institute, 300 South Westnedge Avenue, Kalamazoo, MI 49007, USA; E-mail Hollenbeck@upjohninstitute.org.Jean Kimmel, Department of Economics, Western Michigan University, Kalamazoo, MI 49008-4023, USA; E-mail Jean.Kimmel@wmich.edu; corresponding author.[Acknowledgment]This paper is a substantially revised version of a paper that was first presented at the January 2001 ASSA meetings held in New Orleans, Louisiana, and then circulated as Upjohn Institute Working Paper No. 01-72. The authors thank our discussant, Robert Haveman, for his excellent suggestions; Andrew Houtenville for generous assistance with the disability literature; Doug Kruse for input and data assistance above and beyond the call of duty; and Noyna DebBurman, Jason Preuss, and Yuanlei Zhu for their skillful research assistance. Additionally, we are very appreciative to Claire Black and Sue Berkebile for their superb assistance in preparation of the manuscript. Finally, we thank our journal editor plus two anonymous journal referees.1. IntroductionIn 1990, the U.S. Congress passed the Americans with Disabilities Act (ADA), legislation perceived as a hallmark in the quest by individuals with disabilities for equal access to labor market opportunities. Numerous studies have been published in recent years assessing the outcomes to date of this legislation, and much debate continues regarding its success or failure in improving labor market outcomes. However, the ADA is only one means of addressing labor market difficulties faced by individuals with disabilities. Because its primary intent is to expand the number of employment opportunities via employer accommodation, the ADA may be characterized as a demand-side intervention.1 Numerous education, training, and rehabilitation programs operate on the supply side of the labor market. One example of increased attention on supply-side programs may be seen in the Workforce Investment Act of 1998. This sort of disability management model program has the goal of enhancing the skills and knowledge of workers with disabilities to increase their productivity and employability.2 The returns to education for the population with disabilities is indicative of the potential efficacy of such supply-side interventions. If the rates of return to formal education are large, then it might be argued that there is an underinvestment in such interventions. If the rates are low, then expanding this human capital intervention as a way to improve employment or earnings may not be indicated. Formal educational attainment and its differential effects by disability status and age of onset are the focus of this paper.For an individual with a work-limiting condition, the age of onset of this condition plays a role in education choices and employment. A priori , one might expect that among the population with disabilities, those with early onset of the disability are the most able to adjust human capital investments and obtain job matches that minimize the potentially negative labor market impacts of the disabling condition (see Loprest and Maag 2003). However, the early onset of the disability might hinder human capital investment or affect its quality.Many studies and data sets have been used to document the disparities in employment-related outcomes between people with and without disabilities, and many nice summaries exist in the literature.3 Depending on the data used and the definition of disability,4 approximately 8-15% of individuals of working age have disabilities. In general, individuals with a disability report lower employment rates, lower levels of educational attainment, and lower wages. Additionally, many researchers have reported a post-ADA decline in employment rates, although the cause of this trend is not clear and might be related to a worsening in recent years of disability severity amongst the population reporting disabilities, or the trend might be confounded by changes in the labor force participation rates among the disabled. …