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The effects of a disability employment quota when compliance is cheaper than defiance

Bibliographic Data

ID9726147
AuthorsJudit Krekó (0000-0002-3697-323X, ELTE Centre for Economic and Regional Studies), Álmos Telegdy (0000-0003-4651-5280, Corvinus University of Budapest, corresponding author)
Year2025
Volume92
Issue366
Pages614-643
Publication date2025-04-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueEconomica (JOURNAL)
Journal identifiersISSN: 0013-0427 • E-ISSN: 1468-0335
PublisherWiley (PUBLISHER • GB)
DOI10.1111/ecca.12568
OpenAlexW4406807793
LanguageEN
Citations received1
References cited39

This paper evaluates the effects of the Hungarian disability employment quota, which requires firms over a size threshold to employ individuals with disabilities or pay a non‐compliance tax. In 2010, the tax was raised from very low levels to 170% of the minimum wage cost associated with meeting the quota. We employ a regression discontinuity design on firm‐level data to estimate the effects of the policy and provide a lower‐bound estimate to account for the potential bias resulting from firms bunching below the threshold. Firms respond to the quota by hiring 0.24–0.29 additional workers with disabilities, with a lower bound estimate of 0.12–0.17. However, about two‐thirds of the quota is not fulfilled, which is puzzling as the tax is higher than the minimum wage cost of a worker with disabilities. Our model shows that high hiring costs associated with employing individuals with disabilities might be an important factor behind this anomaly. We test this hypothesis by showing that the effect is weaker in regions with a low share of individuals with disabilities, implying that without adequate policies targeting the removal of supply‐side barriers to the employment of people with disabilities, even strong demand‐side financial incentives cannot achieve their goals

Compliance (psychology) · Economics · Labour economics · Disability Education and Employment · Employment and Welfare Studies · Psychology · Retirement, Disability, and Employment · Social Psychology

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Unique citing works1
Citations per year1
Citation span2026 - 2026 (1)
Citation velocitycurrent
Highly citedNo
Citation typesNeutral: 1

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