The Impact of Learning Disabilities on Children and Parental Outcomes: Evidence from the Panel Study of Income Dynamics 
This paper documents the characteristics of children and young adults identified in the Panel Study of Income Dynamics (PSID) as having a learning disability (LD), and it looks at whether changes in the criteria introduced by the Individuals with Disabilities Education Act (IDEA) of 2004 for learning disability diagnosis have had a noticeable effect determining who receives a diagnosis. The paper also uses the PSID to study the effects of learning disabilities on several childhood, adolescence, and early adulthood outcomes, including employment and labor force participation. In addition, it documents how the presence of children with learning disabilities in the household affects their parents’ labor market outcomes.
Key Findings
- The total number of children served by the IDEA has increased from roughly 5.5 million in the 1995–96 school year to 6.6 million in the 2020–21 school year.
- Given current practices in the diagnosis of LD, barely any children in the 3–5 age group are classified as having an LD. In contrast, LD is the largest disability category among the disorders recognized by the IDEA for the 6–21 age group, roughly 37.2 percent in the 2020-21 school year.
- The percentage of children in the LD category for the 6–21 age group has decreased significantly over time, which could be cause for concern because students without this classification might not have access to specialized instruction.
- In the PSID, parental income and having a parent with an LD are positively correlated with LD diagnosis; girls are less likely than boys to be diagnosed with an LD; Black children and Hispanic children are less likely than white children to be diagnosed with an LD; and children in public schools are more likely to be diagnosed with an LD compared with children in private schools, pointing to the important role public schools play in screening children.
- Changes in the IDEA in 2004 had an effect on LD diagnosis in that measures of discrepancies between various skills became less important for diagnosis.
- Consistent with earlier studies using different data sources, this paper finds that children and young adults identified in the PSID as a having a learning disability experience less desirable outcomes early in life, including trouble with the police, drug use, violent behavior, incarceration, self-reported low levels of well-being, lower educational attainment, and less favorable labor market outcomes.
- Mothers of children diagnosed with learning disabilities are less likely than other mothers to participate in the labor market; however, having a child with an LD has no effect on a father’s probability of being out of the labor force.
Implications
The paper highlights how the PSID can serve as a resource for researchers in fields other than economics who want to track individuals diagnosed with learning disabilities as well as their children. The paper can also raise awareness about learning disabilities among economists, who are equipped to conduct proper cost-benefit analyses that could provide a better understanding of the causal effects and scalability of various interventions. Programs that remediate or improve the outcomes of children with learning disabilities could be especially important at a time when the labor supply has been stunted, given the findings that many individuals with learning disabilities either never enter the labor force or leave the labor force at some point. Economists can also contribute to the efficiency-versus-equity component of the intensifying debate concerning reading methods and which ones are most effective at improving literacy outcomes and potentially remediating certain learning disabilities.
Abstract
We document the characteristics of children and young adults identified in the Panel Study of Income Dynamics as having a learning disability and study whether legislative changes in diagnosis criteria have had a noticeable effect determining who receives a diagnosis. We further document that children and young adults identified as a having a learning disability experience less desirable outcomes early in life, including trouble with the police, drug use, violent behavior, incarceration, self-reported low levels of well-being, lower educational attainment, and less favorable labor market outcomes. We also find that the mothers of children diagnosed with learning disabilities are less likely than other mothers to participate in the labor market.