The Effects of Disability on Earnings in China and the United States

Abstract

This paper compares earnings disparities between persons with disabilities and able-bodied persons in the United States and in China, two countries with widely differing public policies regarding employment of persons with disabilities. In doing so, the paper provides readers with a unique comparative perspective on both the nature of disability policies in China and the United States and on the impacts of these policies. Data from the China Household Income Project Survey (CHIPs) and the US Current Population Survey (CPS) are used to estimate earnings equations in China and the US to test the hypothesis that the adverse impacts of disability on earnings differ between the two countries. The disability rates in the two samples are comparable as are the percentage differences in earnings between persons with disabilities and able-bodied persons. However, the estimated impacts of disability on wage and salary incomes are larger in the United States, where disability policy is essentially an anti-discrimination policy than they are in China, where disability policy includes an affirmative action requirement mandating that employers hire a quota of employees with disabilities against a threat of fines and penalties. The analysis has broad implications for understanding how and why anti-discrimination policies may not be enough to narrow earnings gaps between persons with disabilities and the able-bodied.