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Using the first 12 waves of the Household, Income and Labour Dynamics in Australia survey, the impact of work-limiting disabilities on disaggregated labour force choices is investigated. Findings from a dynamic mixed multinomial logit model point to a significant decline in the likelihood of full-time and part-time work due to disability. Combined with strong state dependence in employment choices, this suggests a slow recovery from a disability shock. Model simulations suggest that high cross- and own-state dependence can amplify a one-off disability shock to alter the probability of full-time employment and non-participation over a long period, especially for low-skilled individuals.
