Disability and Multi‐State Labour Force Choices with State Dependence
Using the first 12 waves of the Household, Income and Labour Dynamics in Australia survey, the impact of work‐limiting disabilities on disaggregated labour force choices is investigated. Findings from a dynamic mixed multinomial logit model point to a significant decline in the likelihood of full‐time and part‐time work due to disability. Combined with strong state dependence in employment choices, this suggests a slow recovery from a disability shock. Model simulations suggest that high cross‐ and own‐state dependence can amplify a one‐off disability shock to alter the probability of full‐time employment and non‐participation over a long period, especially for low‐skilled individuals.
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Document Type: Research Article
Publication date: March 1, 2016