Indiana University SPEA Edward J. Bloustein School of Planning and Public Policy University of Pennsylvania AIR American University

Panel Paper: The Effect of Early Work Experience on Subsequent Labor Market Success for Youth with Disabilities

Friday, November 13, 2015 : 1:50 PM
Tuttle Prefunction (Hyatt Regency Miami)

*Names in bold indicate Presenter

Thomas M. Fraker1, Arif A. Mamun1, Lori L. Timmins1 and Erik W. Carter2, (1)Mathematica Policy Research, (2)Vanderbilt University
The transition to adulthood and meaningful employment after school can be especially difficult for youth receiving disability benefits, since they face unique challenges related to health, social isolation, service needs, and lack of access to supports. These challenges complicate their planning for future education and work, often leading to poor education and employment outcomes, dependence on public programs, and a possible lifetime of poverty.  In 2013, 1,156,000 individuals aged 13 through 25 received Supplemental Security Income benefits totaling $8.7 billion. In the same year, 206,000 individuals aged 25 and under received Social Security Disability Insurance benefits totaling $1.6 billion. These statistics underscore the importance of successful transitions to post high school employment for youth with disabilities.

Existing research suggests that paid employment experience in the last years of high school is strongly correlated with postschool employment success. Indeed, recent policy and legislative initiatives targeted at transition-age youth with disabilities aim to improve their adult employment outcomes through the provision of supports, including early employment experience. For example, the Social Security Administration’s Youth Transition Demonstration (YTD) in 2003-2012, offered youth with disabilities individualized work-based experiences, in addition to other services and supports. And in 2013 the U.S. Department of Education initiated the PROMISE demonstration to provide similar services to youth ages 14-16 receiving Supplemental Security Income. To date, however, little is known about the extent to which early work experience for youth with disabilities has a causal effect on future employment, with much of the existing literature focusing on patterns of correlation.

To better understand how early work experience shapes subsequent labor market outcomes, we analyze a rich longitudinal dataset on youth with disabilities. We use the YTD data for our analysis, focusing on youth who were 18-20 years old and receiving Supplemental Security Income at baseline. We test whether youths’ employment experience during the initial year post-baseline affects their employment experience during the third year. To derive estimates that account for unobserved individual characteristics, which could bias estimates of this effect, we exploit the panel dimension of the YTD dataset. Specifically, we use a dynamic-panel estimation model to account for fixed unobserved individual characteristics that may be correlated with youth’s self-selection into both early and later employment. In our analysis, we also control for other socioeconomic and health factors that may affect subsequent employment.

We find that early work experience has a positive and sizeable effect on subsequent employment success for youth receiving Supplemental Security Income. In particular, employment during the initial year post-baseline increases their probability of being employed during the third year by 17 percentage points. Our results provide strong evidence that early work experience is a key determinant of subsequent labor market success. These findings suggest that interventions to help youth with disabilities have early work experiences could play an important role in shaping their life-long trajectories of employment and benefit receipt.