The dynamic effects of becoming disabled on work, wages and wellbeing in the UK from 1991 to 2018

Abstract

Over recent decades it has consistently been shown that disabled adults in the UK fare worse in the labour market and have lower levels of wellbeing than non-disabled adults. However, this is in part due to the selection into dis-ability of those with existing socio-economic disadvantages. In this article, we use panel data from the combined British Household Panel Survey and Understanding Society, covering the 27 years from 1991 to 2018, to distinguish between the effect of selection, the effect of dis-ability onset and the effect of dis-ability duration on a range of labour market and wellbeing outcomes. We show that there is important selection both into dis-ability and into longer experience of dis-ability on the basis of observable characteristics. We also show the importance of controlling for time-invariant unobservable individual characteristics that similarly affect selection into dis-ability and duration of dis-ability. Even after controlling for both forms of selection, we find significant negative effects of dis-ability onset and duration, and offer policy solutions to address them.