Is there a better measure of self-assessed disability?

Abstract

Activity limitations and work limitations are often used interchangeably to proxy work disability. The findings of this article show that both definitions produce very similar estimates of disability effect on labour force participation if a two-step model is used to address the endogeneity of these self-assessed measures.

Keywords:

• work disability
• activity limitation
• labour force participation

JEL Classification:

• I12
• J21
• C33

Acknowledgments

This article uses the confidentialized unit record file (release 9) of the Household, Income and Labour Dynamics in Australia (HILDA) survey. The HILDA survey project was initiated and is funded by the Australian Department of Family and Community Services (FaCS) and is managed by the Melbourne Institute of Applied Economic and Social Research. The findings and views reported in this article, however, are those of the author and should not be attributed to either FaCS or the Melbourne Institute.

Notes

¹ See Watson and Wooden (2004) for details of the survey.

² These questions capture the severity by focusing on the need of help from others, use of equipment and aids and so on.

³ These categories follow Australian Bureau of Statistics' definition of severity of activity limitations. See the Appendix for the definition of these categories. Wilkins (2004) provides more discussion.

⁴ For the binary measures a binary probit and for the categorical measures an ordered probit model are estimated.

⁵ Note that all disability measures are normalized to have mean 0 and SD 1, and all disability measures enter model 1 as a linear variable as in Au et al. (2005).