Since the Americans with Disabilities Act of 1990 (ADA) set forth the national commitment to eliminating discrimination against disabled persons and to making all possible and necessary accommodations at the place of work, the issues on disability and work become important. Although, several studies on disability and work have found the effect of disability on earnings is still significant, little is known about the effects of specific disability types on earnings, and the effect of disability on earnings within each earnings class.

This study focused on (1) identifying structure of disability types of working-aged adults, (2) analyzing the earnings differentials among each disability types in the returns of various characteristics, and (3) finding the differentials of the effect of disability on earnings within five earnings class. The sample for this study was the adults aged between 18 and 62 (N=38942) in the 2001 Survey of Income and Program Participation (SIPP) wave 5 and its disability topical module.

By using 17 dichotomous disability questioners in ADL, IADL, and functional disability, latent class analysis identified three disability patterns (1> cognitive impaired centered, 2> mobility impaired centered, and 3> instrument related/other disability) (BIC=77544, entropy=0.84). Tobit regression on the log of monthly earned income was followed to determine the effects of each disability types on earned income as non-disabled for a reference group. Finally, quantile regression on the log of monthly earned income was conducted to find the effect of disability on earned income within each income class. The study found that (1) the effects of all types of disability on earnings are significant (p<.001), (2) the cognitive related disability is the most disadvantaged group compared to the others in terms of the effect on earnings (3) the disability is less important factor predicting monthly earnings for bottom, and top quintile. In sum, the persons with disability are not homogeneous population. The effects of disability on earnings are different by disability types, and by earnings class.

The study suggested that rehabilitation services for the disabled should develop more effective and affordable intervention strategies by the consideration of disability types and income class of each disability people. The findings also suggested that social policies and government programs on the disabled would not be successful if they disregarded the differences in the nature of each disability types.