Abstract
This paper investigates the effect of disability on labour force participation in Italy. Using information on limitations to daily activities, we apply a dynamic probit model accounting for state dependence and endogenous initial conditions to the longitudinal section of the 2004–2007 IT-SILC data. We find a significant and negative impact on current disability status that increases in seriousness (from 6.5 % to 10.7 %) in the case of labour force participation. Additionally, past disability status decreases the probability of current employment. Moreover, we find evidence that labour market participation is negatively affected by persistence in disability status (from 12.4 % to 28.1 % according to the seriousness of the limitations) and by the onset of disability (from 6.9 % to 11.3 %). Furthermore, we find that observable factors have a standard effect on labour market participation. Finally, we find evidence of true state dependence and endogenous initial conditions.
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Notes
- 1.
Parodi and Sciulli (2008) have shown that the presence of disabled members in the household and the inadequacy of caring services reduce the labour market participation of the non-disabled household partner.
- 2.
- 3.
This is the case in Italy, where Law 68/1999 requires unemployed individuals (as well as employers) to register with employment centres before they can be hired under the law’s special provisions.
- 4.
In the USA, this group largely includes women, non-whites, high school drop-outs, and former blue-collar workers (Kreider 1999).
- 5.
Kreider (1999) treats reporting bias as a censored sample problem in which responses are assumed to be reliable, on average, for workers but of unknown quality for non-workers and constructs a continuous index of “true” disability. This continuous index is more reliable than a discrete indicator. Kreider and Pepper (2007) extend work on corrupt samples, and develop a set of nonparametric bounds that, in the most basic setting, require only prior information restricting the fraction of persons who may misreport disability.
- 6.
Specifically, 13,335 individuals were interviewed in 2004, 24,769 in 2005, 35,336 in 2006 and 31,663 in 2007. Among households interviewed in 2004, 11,151 were also interviewed in 2005, 8,836 in 2006 and 6,893 in 2007.
- 7.
Alternative definitions include those based on the International Classification of Functioning, Disability and Health (ICF, WHO 2001). In this definition, an individual’s autonomy depends on the characteristics of the context where she lives and operates (capability approach). An alternative approach is the strictly institutional one in which disabled individuals are considered disabled according to whether the institutional system has certified them as such, and who receive disability benefits. The latter approach is prone to bias determined by fraud or by the possible governmental choice of using disability benefits as an instrument of financial support to poor people (for Italy, see Agovino and Parodi 2012).
- 8.
A shortcoming of this definition is the possible bias linked to self-assessment. However, it is flexible enough to accommodate different individual perceptions of given limitations.
- 9.
- 10.
Estimates of time-averaged variables are reported in Table 3.6.
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Agovino, M., Parodi, G., Sciulli, D. (2014). The Dynamics of Disability and Labour Force Participation in Italy. In: Malo, M., Sciulli, D. (eds) Disadvantaged Workers. AIEL Series in Labour Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-04376-0_3
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