Marieke Huysentruyt, from HEC Paris, will present "Diversity and/or Inclusion? Evidence from Disability Quota and Inclusion Laws in Brazil".

Abstract: This paper investigates how firms respond to legislative pressures to pursue diversity and inclusion goals. Adopting a question-driven approach, we study firms’ responses to legislation aimed at improving employment conditions for people with disabilities (PwD) in Brazil. Specifically, we analyze two significant legislative shifts: one in 2012, aimed at strengthening enforcement of disability quotas, and another in 2015, focused on the inclusion of PwD in society. Applying various econometric approaches to a comprehensive matched employer-employee database, and drawing insights from in-depth interviews, we find that, while the changes in legislation led to significantly increased hiring of PwD, these average effects mask important heterogeneity. Accordingly, responses to the law changes were significantly stronger for quota laggards––i.e., firms that fail to meet their disability quotas––particularly for those trailing their quotas by wider margins. Community support for PwD and firms’ commitments to diversity in dimensions other than disability also moderate responses to the law changes. Critically, we also show that, in the absence of a complementary inclusion law, institutional efforts to promote diversity may come at a cost to inclusion: higher representation was associated with an increase in the disability wage gap that was equivalent to a 5-year setback to equitable wages of PwD. These greater wage disparities were only mitigated following the enactment of the inclusion law.