The Vocational Rehabilitation (VR) program is a central component of U.S. disability employment policy, yet limited research examines how participants allocate their time in VR and its implications for labor market outcomes. This study analyzes the relationship between time use in VR—specifically employment during participation, receipt of funded services, and time spent waiting for services—and post-program employment and earnings. Leveraging administrative records from a state VR agency linked to unemployment insurance data, we assess employment trajectories for transition-age youth. The results indicate that employment during VR is a strong predictor of higher post-closure employment rates, shorter unemployment spells, and higher earnings, whereas extended VR participation without employment is associated with weaker short-term labor market outcomes. The estimated return on investment (ROI) of VR participation peaks at seven quarters but declines thereafter, turning negative beyond 26 quarters due to rising opportunity costs. These findings underscore the importance of embedding work-based learning opportunities within VR to enhance long-term labor market attachment and earnings potential.
The Economics of Vocational Rehabilitation: Time Use and Labor Market Payoffs