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Severity of Work Disability and Work

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  • Umut Oguzoglu

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

At any given time, individuals may be subject to health shocks whose impact on work capacity can vary in magnitude. Therefore the variation in severity levels can explain changes in labour force decisions that can not be picked up by the general disability status alone. This paper analyses the effect of severity of disability on labour force participation by using two measures of severity: the self-reported work limitation scales and the SF-36 physical component summary scores. Using five waves of the Household, Income and Labour Dynamics in Australia Survey, several static and dynamic panel data models are estimated to account for state dependence and unobserved heterogeneity in participation. The results suggest that differences in severity levels explain a significant portion of the variance in the participation rates among disabled individuals. It is also found that severe work limitations have a more immediate impact on individuals’ labour force outcomes. Moreover, the disabilities are shown to have longer lasting adverse effects on female participation.

Suggested Citation

  • Umut Oguzoglu, 2007. "Severity of Work Disability and Work," Melbourne Institute Working Paper Series wp2007n30, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  • Handle: RePEc:iae:iaewps:wp2007n30
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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2007n30.pdf
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    References listed on IDEAS

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    1. Bound, John & Burkhauser, Richard V., 1999. "Economic analysis of transfer programs targeted on people with disabilities," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 51, pages 3417-3528 Elsevier.
    2. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54.
    3. John Bound, 1991. "Self-Reported Versus Objective Measures of Health in Retirement Models," Journal of Human Resources, University of Wisconsin Press, vol. 26(1), pages 106-138.
    4. John Bound & Michael Schoenbaum & Timothy Waidmann, 1995. "Race and Education Differences in Disability Status and Labor Force Attachment," NBER Working Papers 5159, National Bureau of Economic Research, Inc.
    5. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    6. Nicole Watson & Mark Wooden, 2004. "The HILDA Survey Four Years On," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 37(3), pages 343-349, September.
    7. Owen O'Donnell, 1998. "The Effect of Disability on Employment Allowing for Work Incapacity," Studies in Economics 9813, School of Economics, University of Kent.
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    Cited by:

    1. Jones, Melanie K & Mavromaras, Kostas & Sloane, Peter J & Wei, Zhang (NILS), 2011. "NILS Working paper no 176. Disability and job mismatches in the Australian labour market," NILS Working Papers 26074, National Institute of Labour Studies.
    2. Jones, Melanie K. & Mavromaras, Kostas G. & Sloane, Peter J. & Wei, Zhang, 2015. "The Dynamic Effect of Disability on Work and Subjective Wellbeing in Australia," IZA Discussion Papers 9609, Institute for the Study of Labor (IZA).
    3. Umut Oguzoglu, 2016. "Disability and Multi-State Labour Force Choices with State Dependence," The Economic Record, The Economic Society of Australia, vol. 92(296), pages 28-46, March.
    4. Zucchelli, E. & Harris, M. & Zhao, X., 2012. "Ill-health and transitions to part-time work and self-employment among older workers," Health, Econometrics and Data Group (HEDG) Working Papers 12/04, HEDG, c/o Department of Economics, University of York.
    5. Mavromaras, Kostas G. & Sloane, Peter J. & Wei, Zhang, 2011. "Disability and Job Mismatches in the Australian Labour Market," IZA Discussion Papers 6152, Institute for the Study of Labor (IZA).
    6. Harris, M.N. & Zhao, X. & Zucchelli, E., 2016. "The dynamics of health and labour market transitions at older ages: evidence from a multi-state model," Health, Econometrics and Data Group (HEDG) Working Papers 16/30, HEDG, c/o Department of Economics, University of York.

    More about this item

    JEL classification:

    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access

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