Disability and Labour Supply during Economic Transition: Evidence from Bulgaria

This paper focuses on the interrelationship between disability and labour force participation for the adult population in Bulgaria. We estimate simultaneous equation models with discrete endogenous variables to account for the different forms of interdependence between health and labour supply. Using the Bulgarian Integrated Household Surveys conducted in 1995, 1997 and 2001, our econometric results indicate that disability exerts a negative effect on labour participation, but labour supply has little effect on disability. Evidence from panel data also suggests that disability reduces labour force participation.