Exploring factors affecting the disability pay gap

In the first quarter of 2023, it was reported that the UK had approximately 9.5 million Disabled individuals aged 16-64, constituting 23% of the working-age population. This demographic faces significant societal barriers, resulting in disparities in employment and earnings, leading to a disability employment gap and a disability pay gap. A disability employment gap and disability pay gap are both persistent features of the UK and global labour markets. While the former has been well-documented, the latter is gaining attention in policy discussions, with calls for mandatory disability pay gap reporting. The disability pay gap refers to the disparity in median hourly pay between these Disabled and non-Disabled people. The pay gap varies by gender and is influenced by factors like ethnicity and the type of impairment. The pay gap is particularly concerning since Disabled people typically face higher living costs than non-Disabled people (e.g. higher travel or energy costs).

The primary data source for earnings analysis in the UK is the Annual Survey of Hours and Earnings (ASHE), which is a 1% sample of His Majesty's Revenue and Customs (HMRC) Pay-As-You-Earn (PAYE) records. However, ASHE has limitations in terms of demographic information - it only contains age and gender - since it is reported by employers. The new ASHE-2011 Census linked dataset offers a more comprehensive range of personal characteristics and opens up the possibility of novel analysis, including on the basis of disability status. This fellowship would seek to utilise this newly available information connected to ASHE to perform earnings analysis on the disability pay gap.

This research project aims to delve into various aspects of the disability pay gap, including intersectional variation, regional disparities, and the underlying drivers. In particular, this fellowship would consist of four work packages. Work Package 1 would focus on intersectional differences in the disability pay gap by gender and ethnicity. Work Package 2 would investigate the extent of regional differences in the disability pay gap and factors associated with larger disability pay gaps. Work Package 3 would focus on the extent to which the disability pay gap can be explained by other demographic differences between Disabled and non-Disabled people (e.g. the fact that there is a proportion of Disabled women than Disabled men). Finally, Work Package 4 would investigate the feasibility of using disability status with the ASHE-2011 Census in years other than the 2011 link year, since a person's disability status may change from one year to the next.

By working directly with Disability Rights UK, a leading Disabled People's Organisation, the findings of the project would be disseminated to appropriate policymakers with an interest in disability employment issues. As such, this fellowship has the potential to increase our understanding of the disability pay gap and how it varies across the country including any regional, gender or ethnic variation. This would in turn shed light on a persistent economic inequality that potentially affects nearly one in four of the working age population.