Estimating the income loss of disabled individuals: the case of Spain

Maria Cervini-Plá, Judit Vall Castelló, Jose I. Silva*

*Corresponding author for this work

Research output: Contribution to journalArticleResearchpeer-review

10 Citations (Scopus)


In this paper, we present a theoretical model along with an empirical model to identify the effects of disability on wages. From the theoretical model, we derive the hypothesis that only the temporary component of the wage gap, which is due to assimilation costs, will diminish over time, whereas the permanent element, which is due to the productivity loss after the disabling condition, will in fact persist. We test this theoretical hypothesis using an exogenous disability shock (accident) and combine propensity score matching with a difference-in-differences method to account for observed and unobserved time-constant differences. In all our specifications, we find that the reduction in wages for the disabled is between 274 and 308 euros per month, and this represents 19–22 % of the average wage of a disabled worker. This gap, however, is more than offset when we count disability benefits and wages collectively as income. As predicted in the theoretical model, we observe that around 40 % of the initial wage gap between disabled and non-disabled individuals is reversed once the transitory drop in productivity disappears. However, we also observe a constant wage gap that remains over time and that corresponds to the permanent fall in productivity predicted by the theoretical model (60 % of the initial wage gap).

Original languageEnglish
Pages (from-to)809-829
Number of pages21
JournalEmpirical economics
Issue number2
Publication statusPublished - 1 Sept 2016


  • Disabled workers
  • Earnings gap
  • Matching techniques


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