Work Limitations and Intergenerational Mobility

Abstract: This paper seeks to determine the degree to which economic disadvantages associated with work-limiting disability may be transmitted to subsequent generations. Persons with work-limitations typically face higher levels of economic disadvantage, including lower earnings, higher expenses, and greater poverty. The United States also tends to have relatively low intergenerational mobility when compared to peer nations. This is important because the Social Security Administration estimates that approximately 25% of new labor market entrants will experience a work-limiting condition at some point in his/her labor market career. Data comes from the Panel Study of Income Dynamics (PSID), and matches 1,128 parent-child pairs from the 1972-1982 birth cohorts. A common measure for intergenerational mobility (the intergenerational elasticity) is estimated for children from households where at least one parent reports a work-limiting disability vis-à-vis children whose parents never report a limitation. Results suggest that children from households with a work-limited parent may experience lower income in their adult years, as well as statistically lower intergenerational economic mobility. Those parent-child pairs classified as the most chronic and/or severely limited are likely driving these results. The analysis is robust to a series of sensitivity tests including the definition of parent disability and income, initial socioeconomic status, as well as child's income, gender, and disability status. As a means of disentangling the multiple channels that may lead to this result, a first difference model of the child's education enrollment from the ages of 15-22 is also estimated. This exercise reveals an increased probability of school exit associated with parent's worsening work-limitations, while an improvement of a work-limitation is associated with lower probability of school exit.

Employment Costs of an Increasing Minimum Wage for Persons with Disabilities (Working Paper)

Abstract: Congress introduced legislation to increase the Federal minimum wage from $7.25 per hour to $15 over a seven year period in May 2017, while also phasing out minimum wage exemptions for workers with disabilities (S. 1242). This paper uses a structural unemployed labor market search model to simulate how such changes may differentially affect employment for persons with and without disabilities. Monthly data comes from the 2016 Current Population Survey, and disability is measured in terms of self-reported functional limitations. Results simulating an increase in the Federal Minimum Wage from $7.25 an hour to $10, $12, and $15 could produce additional unemployment approximately four-five times larger for persons with disabilities relative to persons without disabilities. While this model simulation showcases the asymmetric employment costs of a rising minimum wage for persons with disabilities, it does not consider the benefits, which are likely also disproportionately allocated to the same group. Nevertheless, it is one important aspect in considering the potential outcomes of a rising minimum wage.

Other Working Papers:

  • Jajtner, K., Fountain, C., Mitra, S., Nichols, A. Work Limitations and Income Inequality in the US 1981-2017
  • Mitra, S., Brucker, D., Jajtner, K. Successful Aging: an Inclusive Approach