The Effect of Disability on Labor Supply: Reply.

The article assesses the impact of disability on labor supply. The importance of ill health and disability on labor supply has been discussed. The author stresses that the appearance of bias in the first stage of the statistical model concerning how an individual view his disability is small in magnitude. This model is used as a separator of the decision to enter the labor force from the decision regarding the amount of labor supplied after the worker is in the labor force. The measurement of welfare payments and nonwage income is referred to the family unit.