Does Market Competition Impact Disability Employment? Evidence from Banking Deregulation

• In Event: The Disability Employment Gap: New Evidence from Investigations of Barriers and Interventions

Abstract

If firms face increased market competition, how does this impact their willingness to hire workers with disabilities? Given the potential for there to be unique perceived costs associated with hiring a disabled worker (e.g. accommodation costs, greater employee protections, or a belief that disabled workers would be less productive), firms that experience greater competition may be more sensitive to these additional perceived costs and respond by discriminating against disabled workers. If true, this would add nuance to theories put forth by Becker (1957) and Haessel and Palmer (1978) which posit that firms with greater market concentration are more likely to discriminate against factors unrelated to worker productivity and that market competition acts as force that generally reduces overall discrimination. Previous studies have examined the impact of market competition on discrimination by race, gender, and immigrant status (e.g. Dodini and Willén 2025; Levine, Levkov, and Rubinstein 2012), but no paper to my knowledge has examined the impact on discrimination by disability status.

I examine this question by exploiting a natural experiment in banking deregulation that created an exogenous increase in market competition across waves of states from the late 1970s to the mid-1990s. This deregulation increased the number of bank branches that were opened, which increased the level of competition within the banking sector. Using a difference-in-differences design coupled with data obtained from the Current Population Survey, I examine whether states that adopted these deregulations early experienced changes in disability hiring within the banking sector compared to states that adopted these deregulations later. These findings have implications on the overall benefits of increasing market competition and whether pro-competition policies should be coupled with increased protections for disabled workers.  

Author

• Matthew Bryan Forbes, RAND School of Public Policy
  Presenting Author