Disability Employment: An Analysis of the Efficacy of State Tax Credits

Abstract

People with disabilities are often excluded from the workforce. To address this ongoing challenge, lawmakers have enacted a series of legislative solutions including; the Rehabilitation Act of 1973 and the Americans with Disabilities Act. One solution that has seen limited implementation is the availability of state tax credits for businesses who hire people with disabilities. There are currently six states of differing demographic, economic, and political makeup that offer companies such tax credits. These tax credit programs are implemented to increase demand for employees with disabilities, and in turn improve disability employment outcomes. This thesis presents detailed analysis on the efficacy of state disability employment programs in their effort to improve disability employment outcomes. It builds on existing literature to evaluate how previous research has used Case Service Report (RSA-911) data. Additionally, it considers how other authors have evaluated disability employment tax credits overseas, the impacts of the Work Opportunity Tax Credit (WOTC), and other state employment tax credits. To conduct this analysis, this thesis uses Case Service Report (RSA-911) data from the U.S. Department of Education. It utilizes an OLS regression and propensity score matching analytical approach. This thesis identifies a statistically significant relationship between states offering tax credit programs and improved disability employment outcomes. Since many policymakers continue to be uncertain over the efficacy of such tax credits, this analysis offers valuable insight as to their potential benefits to the disability community and the need for further research.