The effect of acquiring disability on employment outcomes in Australia

The empirical literature, both in Australia and internationally, finds that the acquisition of a disability has negative effects on individual labour market outcomes. For example, researchers have used longitudinal data from the Household Income and Labour Dynamics Australia (HILDA) survey to causally estimate labour market outcomes several years after disability onset, finding lasting negative impacts on employment (Polidano and Vu, 2015). Using recent developments in staggered difference-in-differences techniques, newly updated HILDA data, and a longer time horizon, we extend on this existing body of evidence and find sharp and persistent negative impacts of disability onset on labour market outcomes. Compared to a counterfactual of not experiencing disability, employment falls 5 percentage points in the year of onset, and 9 percentage points by ten years post-onset. Similar observations can be made for average weekly hours worked and real annual salaries and wages. In contrast, income from government transfers increases only slightly post-onset and does not come close to compensating for this income loss.

Mingji Liu is an assistant manager in the Firm, Innovation and Technology Analysis team within the Department of Industry, Science and Resources. His professional focus includes applying econometric frameworks to estimating the impacts of policies on firm performance, productivity, and innovation activities. Prior to joining the Department, Mingji was a master’s student in economics and public policy at the Barcelona School of Economics and was previously at CSIRO, where he worked on estimating the economic benefits of R&D and emerging industries.