Research Insights: How Do Laws and Nudges Affect Compliance with Disability Employment Quotas?

Chiles Law 21.015, enforcing a 1% employment quota for people with disabilities (PwD) in larger firms, led to a 15.8% increase in PwD employment and 3.6% more eligible firms employing PwD. Informational letters sent to eligible firms increased PwD employment by 0.13 worker. This cost-effective approach has a significant impact with minimal implementation costs. The results are hindered by the fact that a large fraction of the increase is explained by the reclassification of incumbent workers, thus not representing true labor inclusion. This is particularly the case when firms are nudged to comply.