Author Proof Abstract Providing employment-related services, including supported employment through job coaches, has been a priority in federal policy since the enactment of the Devel- opmental Disabilities Assistance and Bill of Rights Act in 1984. We take advantage of a unique panel data set of all clients served by the South Carolina Department of Disabilities and Special Needs between 1999 and 2005 to investigate whether job coaching leads to stable employment in community settings. The data contain information on individual characteristics, such as IQ and the presence of emo- tional and behavioral problems, that are likely to affect both employment propen- sity and likelihood of receiving job coaching. Our results show that unobserved individual characteristics and endogeneity strongly bias naive estimates of the effects of job coaching. However, even after correcting for these biases, an econom- ically and statistically significant treatment effect remains. © 2010 by the Associ- ation for Public Policy Analysis and Management. INTRODUCTION Providing employment-related services to individuals with developmental disabili- ties has been a priority in federal policy for the past 25 years, starting with the Developmental Disabilities Assistance and Bill of Rights Act in 1984 (reauthorized in 2000, it is referred to as the DDA from this point on). The DDA encouraged the creation of state-level supported employment programs designed to help individu- als with developmental disabilities find and retain paid employment in integrated settings in a community. By 2006, every state had supported employment programs, with total spending of $709 million, accounting for 21 percent of all individuals in day/work programs (Braddock, Hemp, & Rizzolo, 2008). Supported employment placements are thought to be cost-effective when compared to the alternative of providing other day services for adults, but there is little evidence to show whether these services are effective at achieving the stated policy goal of stable, paid employment in community settings. We take advantage of a unique panel data set from South Carolina to measure the extent to which employment gains by individ- uals who receive supported employment services can be attributed to participation in the program. Our results show that program participants have attributes associ- ated with greater employability, such as higher IQs and lower incidence of emo- tional and behavioral problems. However, after controlling for observed and unob- served heterogeneity of participants and nonparticipants using propensity score matching, fixed effects, and instrumental variables methods, we still find that Does Supported Employment Work? Melayne Morgan McInnes Orgul Demet Ozturk Suzanne McDermott Joshua Mann Journal of Policy Analysis and Management © 2010 by the Association for Public Policy Analysis and Management Published by Wiley Periodicals, Inc. Published online in Wiley InterScience (www.interscience.wiley.com) DOI: 10.1002/pam.20507 PAM293_20507.qxd 4/22/10 7:24 PM Page 1