Measuring the Effects of Employment Protection Policies: Theory and Evidence from the Americans with Disabilities Act

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Date and Time: 
Thursday, May 25, 2017
12:00 pm – 1:00 pm

Title I of the Americans with Disabilities Act (ADA) was intended to protect the disabled from discrimination in labor markets. We theoretically show that the strength of the policy and its impact on employment might not be monotonic, as firms respond in two ways–changing hiring/firing practices and reducing job creation. By exploiting cross-state variation in pre-ADA legislation, we measure the effects of the law and use the results to compute costs under the ADA. In contrast to a small change in employment, we find 10% decline in employment-to-non-employment transitions after the ADA, suggesting that the ADA imposed significant costs on firms.