Disaggregating Employment Protection: The Case of Disability Discrimination

Studies of the effects of employment protection frequently examine protective legislation as a whole. From a policy reform perspective, however, it is often critical to know which particular aspect of the legislation is responsible for its observed effects. The American with Disabilities Act (ADA), a 1990 federal law covering over 40 million Americans, is a clear case in point. Several empirical studies have suggested that the passage of the ADA reduced rather than increased employment opportunities for individuals with disabilities. To the extent this is true, it is crucial to credibly disentangle the different features of this complex and multi-faceted law. Separately evaluating the distinct aspects of the ADA is important not only for determining how the law might best be reformed if some aspects of it produce negative employment effects, but also for improving our understanding of the potential consequences of ADA-like provisions in race and other civil rights laws. This paper exploits state-level variation in pre-ADA legal regimes governing disability discrimination to separately estimate the employment effects of each of the ADA’s two primary substantive provisions. We find strong evidence that the immediate post-enactment employment effects of the ADA are attributable to its requirement of “reasonable accommodations” for disabled employees rather than to its potential imposition of firing costs for such employees. Moreover, the pattern of the ADA’s effects across states suggests, contrary to widely-discussed prior findings based on national-level data, that declining disabled employment after the immediate postADA period may reflect other factors rather than the ADA itself. Thanks to Josh Angrist, David Autor, Ian Ayres, John de Figueiredo, Thomas DeLeire, Lawrence Katz, Anup Malani, Thomas Miles, Paul Oyer, David Stapleton, and seminar participants and discussants at the American Economics Association Annual Meeting, the Harvard Labor Economics Workshop, the Harvard Law and Economics Seminar, the Society of Labor Economists’ Annual Meeting, the University of Virginia Law and Economics Seminar, the American Law and Economics Association Annual Meeting, and the NBER Summer Institute for helpful comments. We are also grateful to Jerry Ling, Jane Maschka, and Charlotte Sanders for outstanding research assistance; to David Autor and Mark Duggan for providing us with their state-level Social Security Administration data and state unemployment rate series; and to Harvard Law School librarians Deanna Barmakian, Maura Burns, and Mindy Kent for extensive help in locating historical state laws governing employment discrimination against individuals with disabilities. J.J. Prescott also acknowledges financial support from the John M. Olin Center at Harvard Law School.