Labour Market Impacts from Disability Onset

In this paper we estimate the causal labour market impacts of disability onset up to four years after onset using longitudinal data from the Household Income and Labour Dynamics Australia (HILDA) survey and difference-in-difference propensity score matching techniques. We find lasting negative impacts on employment, especially full-time employment, which is linked more to reduced movement into full-time employment than to downshifting from full-time to part-time work. Longer-term, impacts on employment and income support reliance are greater for those without post-school qualifications, which points to differential social costs of onset by education. Therefore, to be cost-effective, prevention and vocational rehabilitation measures should be targeted at low-skilled workers.