Unemployment Duration and Disability: Evidence from Portugal

This paper studies the relationship between having a disability and unemployment duration by focusing on individuals registered at Portuguese job centers. Despite its relevance, because disabled people are likely to occupy disadvantaged positions in the labor market, it has received little attention in the literature. As different disabilities affect unemployment duration differently, we distinguish different types of disabilities and shed light on disability-specific support policies. We apply a discrete time hazard model with unobserved heterogeneity to microdata from the Instituto do Emprego e Formação Profissional, which are free from self-reporting problems in disability identification. We find lower reemployment probabilities for many groups of disabled people: individuals with impairment in general functions, disfiguring, speech and visual disorders, muscle-skeletal and other organ impairments experience the more disadvantaged positions. Decomposition analysis indicates that part of the disadvantage is due to differences in returns rather than to differences in characteristics. These findings suggest that the disadvantage of disabled people in the labor market is not only explained by a different distribution of characteristics but especially by the interaction of their characteristics with the work environment. Policy implications are discussed.