EFQA Research Seminar Series with Serena Rhee

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Assistant Professor of Economics Department of Economics, Finance and Quantitative Analysis

Title: "Firm Responses to Employment Quotas: Evidence from Bunching and Policy Implications"

Description: Do disability hiring quotas achieve their goals? Drawing on evidence from South Korea, this talk explores the benefits and unintended consequences of policies designed to expand employment opportunities for disabled workers.

Research Abstract: Employment quotas are a prevalent policy to promote hiring of disabled workers, yet they may impose additional costs on firms. Leveraging South Korea’s multi-tiered noncompliance penalty schedule, we use a bunching framework to identify firm responses to employment quota. We find significant but highly heterogeneous bunching across notches and firm wages, demonstrating substantial variation in adjustment costs. We develop a structural model of firm, using bunching elasticities to calibrate firm-side cost parameters. Simulations reveal that while quotas increase disability hiring, aggressive mandates can trigger a contraction in firm scale. Designing quotas to account for firm-side adjustment cost structures can mitigate these distortions.