Integrating People with Disabilities into the Open Labour Market: How Can Wage Subsidies Help? Experience from Czechia

Abstract

This article analyses the effectiveness of a wage subsidy programme in integrating people with disabilities into the open labour market in Czechia. In theory, it builds on the capability approach and uses a counterfactual method. The wage subsidy programme has a more significant effect on people with disabilities than on healthy participants and is better for those participants with disabilities who have lower levels of education compared to participants with higher levels of education. We assume that this results from the combined effects on the capability set of people with disabilities in the labour market: the screening effect, the on-the-job training effect and the workplace integration effect. Creaming off within groups, however, is difficult to avoid: it is the more educated and less disadvantaged subgroups of people with disabilities that are
prioritised for inclusion in the programme, which lessens its overall impact. These findings imply that wage subsidy programme should be provided more widely to unemployed people with disabilities to support their integration into the open labour market. Policymakers should prevent within-group
creaming off of these candidates.