Originally published here.

As the extent of disability increases in society, there is an increasing need to understand relatedconsequences in many aspects of social inclusion. In this paper, we provide a rigorous analysis ofthe transitions into and out of disability and the related consequences for employment. We comparethe effect of onset, exit and persistent disability on the probability of employment. This improves ourcapacity to estimate the effects of disability with precision and allows the channels whereby these effectsoperate to be traced with more confidence. The results imply that employment policy should focus onthe heterogeneity of disabled people, depending on their respective transitions into disability and theduration of their disability.

As the extent of disability increases in society, there is an increasing need to un-derstand related consequences in many aspects of social inclusion. One aspect thathas received particular attention in recent years is the negative association betweendisability and employment. There is an ongoing shift in thinking about the definition of disability from the older medical model towards a social model, (World HealthOrganisation, 1999) and there is an increased endeavour for greater integration ofdisabled people into society.

At the same time, many countries have introducedequality legislation to the effect of disallowing discrimination on the basis of severalgrounds including disability. In Ireland, this legislation was introduced in 1998 but basic published statistics have shown that even though the employment rate increasedin general in the economy, similar trends are not evident for people with disabilities.Furthermore, the extent of in-depth research on the relationship between disabilityand employment has until recently been quite limited, and to date there is no rigorousanalysis of the transitions into and out of disability and the related consequences foremployment. Nonetheless, the relationship between disability and labour force participation in astatic context has been the focus of much research.

Internationally, the first generationof such econometric studies emerged around the late 1970s.

To give some US examples, Bartel and Taubman (1979) analysed the effect of health on earnings and laboursupply, whereas Chirokos and Nestel, (1985) related annual hours worked to healthhistory. More recent research has emphasised the importance of the way health andlimitations are captured, for example Wolfe and Hill (1995) and Madden and Walker(1999). Using the UK Labor Force Survey, Kidd, Sloane and Ferko (2000) analysedthe effect of health limitations on the kind of paid work possible. Recent researchin Ireland (see Gannon and Nolan, 2004) on the association between disability andlabour force participation used data from the Living in Ireland survey 2000. Thisshowed a substantial effect of disability on participation for both men and women,in particular for those with severe or to some extent limiting conditions. However, across-sectional “snapshot” of people who report that they are currently affected bychronic illness and disability, will include people with very different experiences ofdisability. Some will have had a chronic illness or disability since birth, some will havedeveloped a disability or chronic illness recently which will in all likelihood affectthem long-term, and others will only experience that disability for a short period. Wewould expect the impact of these different patterns of disability on employment to bevery different. This is in essence why it is important to complement a cross-sectional picture with the analysis of the dynamics of disability over time and how it affectscrucial aspects of societal participation.With longitudinal data we can follow individuals over time, and assess theiremployment status, as transitions into or out of disability occurs. This improves our capacity to estimate the effects of disability with precision and allows the channelswhereby these effects operate to be traced with more confidence.

However, a completestructural model of these dynamics is unreasonably complicated and therefore to datehas not been applied to data on disability and employment in any of the internationalresearch in this area. The applications that are closest to a complete model can befound in some international studies, for example Bound et al (1999), Lindeboom andKerkhofs (2002), and Disney et al. (2004). In Ireland, the only comparable researchis by Gannon (2005), but once again the model is a reduced form one, as it does notaccount for the influence of wages.In this paper, we do not attempt to estimate the theoretical model, but aim to fillin some remaining gaps in the literature with regard to acquired, previous and persis-tent disability. The added value of this paper to the dynamics of disability and workarises via the explanatory variables. Essentially, the focus of this paper is to comparethe effect of onset, exit and persistent disability on the probability of employment.The onset and exit disability variables are defined in terms of two year spells – thisensures we obtain estimates of long-lasting disabilities. Our paper therefore, providesa new contribution to Irish literature, and in addition, it goes beyond previous work by Jenkins and Riggs (2003) by incorporating exit from disability and persistence indisability status into the model of work and disability.

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