Disability Employment and Firm Productivity: Evidence from a novel panel data in Japan
(Previous title) Revisiting Disability Employment and Firm Productivity in Japan

This study examines the causal impact of employing persons with disabilities on corporate financial performance and productivity in Japan. Using a novel panel dataset that combines administrative records on disability employment with financial data from Japanese firms between 2013 and 2019, we examine whether hiring persons with disabilities influences firm productivity outcomes. Applying firm fixed effects and controlling for time-varying factors, we find modest but statistically significant increases in operating and net profits for small and medium-sized enterprises (SMEs) with 200–1,000 employees in the manufacturing sector. By contrast, first-time hires or the addition of a single employee with a disability do not yield statistically significant financial effects. These findings suggest that SMEs with more experience in employing persons with disabilities may be better positioned to realize financial benefits, likely by fostering supportive work environments and assigning tasks suited to individual capabilities. The study contributes to the limited empirical literature on disability employment and firm performance, offering evidence to inform labor market policies aimed at promoting inclusive employment practices.