(Revised March 30, 2025)

I study the effect of a quota for disabled workers on the labor market and welfare. In Brazil, firms with more than 100 workers must have between 1% and 5% of their labor force composed of disabled workers. I show that the enforcement of the quota led to a decrease in firm size and wages, despite increasing the hiring of disabled workers. At the market level, the quota increased wages and the labor force participation of disabled workers but at the cost of reduced employment for non-disabled workers. Using a model calibrated to the empirical estimates, I find that the quota for disabled workers decreased utilitarian welfare by 0.026%.