Economic Inclusion and Quality of Life: Assessing the Impact of Integrating People with Disabilities into Saudi Arabia’s Labor Market

The objective of this study is to examine the macroeconomic effects of disability-inclusive labor regulations in Saudi Arabia. A dynamic Computable General Equilibrium (CGE) model is calibrated to a commodity-disaggregated Social Accounting Matrix (SAM). The study simulates two policy scenarios: a general employment quota and a service-sector-specific quota for persons with disabilities (PWDs). Each scenario is evaluated under different elasticity of substitution parameters (σ = 0.8, 1.0, 1.5) to capture the sensitivity of the economy to production flexibility. The findings indicate that both regulatory policies produce positive macroeconomic impacts, particularly in scenarios of low substitution elasticity, reflecting limited capacity of firms to replace PWD labor with alternative inputs. Under such conditions, increased PWD employment enhances real GDP, amplifies household consumption, stimulates investment, and yields GDP multipliers exceeding 2.0. Nevertheless, when production flexibility rises (σ = 1.5), the beneficial economic impacts diminish, resulting in GDP multipliers falling below 1.0, indicating less responsiveness and constrained supplementary employment or investment. The study highlights the importance of labor market structure in determining the effectiveness of inclusive employment policies. In less flexible production systems, disability inclusion fosters robust and sustainable economic benefits. In contrast, adaptable systems may necessitate supplementary measures to sustain the progress of labor inclusion and its impact on economic inclusion and quality of life.