The effect of disability on labour market outcomes in Germany : evidence from matching

If labour market policies aimed at people with disabilities are effective, we should observe no significant
difference in labour market outcomes between disable and non-disable individuals. This paper examines the impact of
disability status on labour market outcomes using matching methods associated with treatment effect techniques for
program evaluation. Such techniques avoid model misspecification and account for the common support problem,
thus improving the identification strategy of alternative techniques that also select on observables. Using several
waves from the German Socio-Economic Panel (GSOEP, 1994-2000) we estimate the impact of disability on both labour
market participation and labour earnings. We find no significant difference in either of these two measures of labour
market outcomes between disable and non-disable. Due to the construction of the treated and comparison groups,
our results imply that (in Germany) disability labour market policies are effective at achieving their aim.