Employer Accommodation and Labor Supply of Disabled Workers

We examine the factors that influence employer accommodation of newly disabled workers and how effective such accommodations are in retaining workers and discouraging disability insurance applications. Using the Health and Retirement Study, we find that only a quarter of newly disabled older workers in their 50s are accommodated by their employers in some way following onset of a disability. Importantly, we find that few employer characteristics explain which workers are accommodated; rather, employee characteristics, particularly the presence of personality traits correlated with assertiveness and open communication, are highly predictive of accommodation. We also find that if employer accommodation rates could be increased, disabled workers would be significantly more likely to delay labor force exit for up to two years. However, accommodation does not appear to reduce subsequent disability insurance claiming.