Labor Economics Commons^™

Partial Disability And Labor Market Adjustment: The Case Of Spain, José Ignacio Silva, Judit Vall

José Ignacio Silva

Although partially disabled individuals in Spain are allowed to combine disability benefits with a job, the empirical evidence shows that the employment rate of this group of individuals is very low because they have a much lower job finding and a higher job separation rates than nondisabled workers. Moreover, a decomposition analysis of the equilibrium employment rate shows that the differences in the job finding rates explain 85 percent of the disabled employment gap. To explain these facts, we construct a labor market model with search intensity and matching frictions to identify the incentives and disincentives to work in Spain …