Employer accommodation and labor supply of disabled workers

Abstract

We use longitudinal data from the Health and Retirement Study to examine what factors influence employer accommodation of newly disabled workers and how effective such accommodations are in retaining workers and discouraging disability insurance applications. We find that only a quarter of newly disabled older workers are accommodated by their employers in some way following onset of a disability. Importantly, we find that few employer characteristics explain which workers are accommodated; rather, employee characteristics, particularly the presence of certain personality traits correlated with assertiveness and open communication, are highly predictive of accommodation. This suggests that policies targeting employer incentives may not be particularly effective at increasing accommodation rates since employers may not even be aware of their employees need for accommodation. We also find that if employer accommodation rates can be increased, disabled workers would be significantly more likely to delay labor force exit, at least for two years. However, we do not find significant effects on the disability insurance claiming margin.