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Disability and Multi‐State Labour Force Choices with State Dependence

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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

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