Labour market impacts from disability onset

In this paper we estimate the causal impacts of disability onset on labour market outcomes 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 full-time employment, which is linked more to people foregoing opportunities to move to full-time work rather than downshifting from full-time to part-time work. Impacts are greater for those without post-school qualifications because they face poor prospects once dislocated from work. These results point to the importance of prevention and vocational rehabilitation programs that are targeted at lowskilled workers.