Employment Quota System and Labour Market Outcomes of Individuals with Disabilities: Empirical Evidence from South Korea

To date, only a few studies have attempted to evaluate the effectiveness of disability employment quota systems using structural changes in policies. This study exploits the structural changes in South Korea's disability employment quota system that took place in 2004 and 2006 to expand the current disability policy evaluation literature. We separate the effect of these changes in the quota system into their effect on the probability of labour force participation and their effect on the probability of employment (after controlling for selection into the labour market). We also study the extent to which the changes – which included increasing the number of employers covered by the quota system, the number of jobs available to individuals with disabilities and the financial incentives for employing individuals with disabilities – have affected job satisfaction among individuals with disabilities. Our results suggest that the changes in the quota system may have increased labour force participation but have had a limited positive impact on the probability of employment among people with disabilities in South Korea. Further, compulsory hiring and expanded opportunities have not substantially affected the level of job satisfaction observed among employees with disabilities relative to their non‐disabled counterparts.