From welfare enterprises to broad tax incentives: Effects of employment policy changes on disabled in China

Abstract

This study evaluates the shift in China's disability employment strategy from welfare enterprise systems to tax incentives using data from the China Health and Retirement Longitudinal Study (2011−2020). By applying Propensity Score Matching-Difference-in-Differences methodology, the study examines the impacts of the 2016 tax incentive policy on employment outcomes for middle-aged and elderly disabled individuals. Contrary to policy expectations, the findings reveal a decline in employment rates and weekly working hours for disabled individuals compared to their non-disabled peers. The dismantling of welfare enterprises, which previously provided stable jobs for disabled workers, contributed to this outcome. Economically disadvantaged and less-educated groups experienced the most severe setbacks, highlighting the uneven distribution of the policy's impacts. Structural barriers, including high compliance costs and employer biases, further constrained the policy's effectiveness. This study concludes that the current policy framework falls short of achieving its intended goals. Targeted interventions, such as workplace accommodations, subsidies, and vocational training, are crucial to addressing structural challenges and enhancing the inclusivity of disability employment policies.