Helping people with disability participate in the labour market is one way to enhance their economic and social well-being. However, low levels of education among people with disability generally can hinder their participation. Using data from the Household, Income and Labour Dynamics in Australia survey, this study looks at the role of vocational education and training (VET) qualifications not just in labour market outcomes for people with disability but in improving their working conditions. Whether post-school qualifications lessen the impact of disability onset is also examined. Completing a VET qualification is found to improve the rates of full-time employment in the longer term for those previously out of work or working part-time. With this comes greater financial independence.
About the research
This study extends previous work of Cain Polidano and Kostas Mavromaras (2010) which showed that VET qualifications had a positive effect on the chances of finding work for people with a disability. It teases out this earlier result by looking at whether, for those who already have a disability, completing a VET qualification improves conditions of employment — wage rates, the probability of being in full-time employment, job satisfaction — and benefits of employment, including household income and welfare dependence in comparison to those with no post-school qualification. Higher education qualifications are not considered because they are rarer for people with a disability to attain.
Polidano and Vu extend their thinking about the relationship between education, disability and labour market outcomes, by also considering what happens in situations in which the disability occurs after an individual is in the labour market. Their focus is the extent to which VET and higher education qualifications may reduce the disruptive effects of disability onset.
One of the difficulties in undertaking this analysis is that an individual's qualifications impact on choice of occupation and people in some occupations are more likely to be affected by a disability than in others—perhaps because of the level of physical requirements inherent in different jobs. (This study reports that physical disabilities are the most common type of disability irrespective of qualification level). In this respect, Polidano and Vu find that rates of employment in the first year of disability onset decline by nine percentage points for those with no post-school qualification and 11 percentage points for those with a VET qualification compared to only five percentage points for those with a higher education qualification. One would suggest this says more about the occupation than the possession of a qualification as such.
A new finding is that, for people with disability who are out of work or in a part-time job, completing a VET qualification significantly improves the chances of getting a full-time job, compared to those with no post-school qualifications. With this comes greater financial independence.
- Completion of a VET qualification however does not necessarily lead to greater job satisfaction, job security or hourly wage rates.
- The impact of the onset of a disability changes little between one and three years after onset, irrespective of the level of qualification.
- Education begets education. People with a long term disability (onset of a three-year disability spell) who have higher education qualifications are more likely to retrain relative to those with a VET qualification, who in turn are more likely to retrain than those with no post-school qualification.
Managing Director, NCVER
Disability is often associated with adverse labour market outcomes and is related to a number of factors, including lawful and unlawful discrimination, the added costs of participation, actual or perceived incapacity and poorer education outcomes (Productivity Commission 2004). In recent times, the Australian Government, as outlined in its National Mental Health and Disability Employment Strategy (2009), has identified further opportunities in education as key to addressing labour market disadvantage for people with a disability.
The focus of this report is on the role of post-school education qualifications, in particular vocational education and training (VET) qualifications, in improving the employment and working conditions of people with a disability. A previous study by Polidano and Mavromaras (2010) showed that, in addition to helping people with disabilities to return to work, VET helps to maintain them in employment for up to three years after course completion. This report builds on this work by examining, not just the potential benefits of completing a VET qualification to employment rates in the first three years, but also to a range of other labour market outcomes, including the chances of full-time employment, hourly wage rates, job satisfaction, job security, skills utilisation, reliance on the Disability Support Pension and economic disadvantage.1 The benefits of completing a VET qualification are estimated separately for those who are out of work, in part-time work or in full-time work prior to completing a VET qualification. As a point of comparison, benefits are also estimated for those without disability.
This study also examines the role of previously attained qualifications acting as a buffer to the initial impacts of disability onset and in helping with adjustment up to three years later. This is done by estimating the dynamic impacts of disability onset (defined as at least two consecutive years with a disability, preceded by two consecutive years without) across groups of individuals employed prior to onset and who had no post-school qualifications or whose highest qualification is either a VET qualification or a higher education qualification.
The analysis in this study is conducted using a longitudinal dataset — the Household Income and Labour Dynamics in Australia (HILDA) survey — combined with propensity score matching techniques. Propensity score matching is used instead of typical regression methods because it is better able to deal with potential bias from self-selection, which may occur when allocation to the treatment is non-random. In the context of this study, there is evidence in the literature that both treatments of interest are non-random, with disability onset linked to prior labour market disadvantage (Jenkins & Rigg 2004) and participation in education associated with higher ability (Kenny et al. 1979). Subject to certain assumptions being met to deal with self-selection, propensity score matching estimates 'causal' treatment effects. To date, the vast majority of studies that have quantified the impacts of disability on labour market outcomes have been undertaken by comparing the outcomes of those with and without disability, which tells us nothing about whether disadvantage is due to disability onset or due to pre-existing disadvantage. Understanding the causes of disadvantage for people with a disability is important for policy design. For example, if disadvantage pre-dates disability, then programs to deal with the disadvantage of people with a disability may be much the same as programs that deal more generally with disadvantage in the community.
Labour market outcomes from completing a VET course
Consistent with the findings from Polidano and Mavromaras (2010), we find that the strongest labour market benefit from completing a VET course for people with a disability is in shifting those who are out of work into employment. It is estimated that for those with a disability who are out of work, completing a VET course increases their chances of being in employment by 16 percentage points in the first year out and by 20 percentage points by the third year. Confirming the prior results using propensity score matching, which is better suited to addressing self-selection issues, adds to the robustness of the Polidano and Mavromaras (2010) findings.
A new finding is that for people with a disability who are out of work or in part-time employment, completing a VET qualification is estimated to improve their chances of attaining full-time employment by 14 percentage points and 15 percentage points respectively by the third year after completion. This reduces their reliance on the Disability Support Pension and reduces their risk of becoming economically disadvantaged. It is likely that completing a VET qualification helps people with a disability to move to a job where their disability does not affect their capacity to work full-time. The greater utilisation of skills and abilities of people with a disability following the completion of a VET course is borne out by around a ten per cent improvement in reported skills utilisation in the first year after completing the course.
Despite the estimated improvement in the skills utilisation of people with disabilities, we find no evidence that completing a VET course leads to significant improvements in job satisfaction, satisfaction with job security or hourly wage rates. Compared with those with a disability, we find similar effects, albeit lower in magnitude for people without a disability.
These results underline the importance of VET in improving the utilisation of the skills and abilities and financial independence of people with a disability.
Impacts of disability onset
Regardless of past education, we find that disability onset has a greater effect on the rates of full-time employment than on the rates of part-time employment. This may be because those in part-time employment are less affected and/or some of those previously employed full-time switch to part-time employment to help them cope with their condition. This result provides evidence in support of the explanation for the higher prevalence of part-time employment among people with a disability given by Schur (2003) and Jones (2007); namely, that part-time employment enables people with a disability to better manage their condition.
As a reflection of the more physically demanding nature of jobs likely to be performed by people with no post-school or VET qualifications, we find that their rates of employment in the first year after disability onset are more affected (nine and 11 percentage points reduction respectively) than the rates of those with higher education qualifications (five percentage points reduction). Importantly, however, in contrast to those with no qualifications, those holding VET qualifications are not estimated to experience significant knock-on effects in relation to economic disadvantage or reliance on the Disability Support Pension. Compared with those with no post-school qualifications, those with VET qualifications who temporarily cease their job following disability onset are much more likely to retain their job in the first year after onset. This greater job retention is likely to be a consequence of those with VET qualifications having a wider access to leave entitlements; furthermore, they are unlikely to incur a significant wage penalty in their return to employment because their qualification provides them with other job options. For those without post-school qualifications, a larger proportion of their existing skills, because they are job-specific, may not be recognised by other employers. This means that to regain employment, they may have to incur a wage reduction in the short-term. If their disability prevents them from working in lines of work similar to those before onset, their wage penalty may be even greater because employers will not recognise their industry-specific skills.
Results for the third year after disability onset show differing patterns of adjustment by education qualification. For those with no qualifications, the estimated negative impacts of disability onset on employment are estimated to increase from nine percentage points in the first year, to 12 percentage points in the third. In contrast, for those with VET qualifications, the negative impact of disability onset on employment rates is estimated to fall slightly from 11 percentage points in the first year, to ten percentage points in the third. Those who hold VET qualifications may adjust at a faster rate than those without qualifications because their higher rate of job retention makes it easier for them to return to employment after recovery — or their qualifications may make it easier to find alternative employment. As a result, after three years, we observe a lower reliance on the Disability Support Pension among those with VET qualifications compared with those without post-school qualifications.
An important finding is that those with qualifications are more likely to return to study as a result of disability onset, but not until the third year after onset. The delay in retraining is likely to be because of the initial uncertainty surrounding the longer-term impacts of the disability on an individual's productivity in their pre-onset line of work. We also find that the chances of those with qualifications retraining increases with the duration of disability, with higher rates among those whose disability persists for a third consecutive year. Worryingly, we find no significant evidence that those without qualifications retrain after disability onset, which is likely to have longer-term implications for their labour market participation.
Results from this study underline the importance of post-school qualifications in moderating the labour market impacts of disability onset and, through retraining, improving the participation, skill use and economic independence of people with a disability. From a policy perspective, these results support government initiatives to improve workforce engagement in education, including for people with a disability. In particular, our findings suggest that measures aimed at improving the engagement in education of those without qualifications may help to alleviate some of the longer-term problems associated with the growing rates of disability in an aging workforce. This poses a difficult problem, because evidence suggests that, despite comparable returns from doing so, those without qualifications are estimated to be less likely to return to study than those with post-school qualifications, mainly because of personal differences, such as risk aversion and exam anxiety (Fouarge, Schils & de Grip 2010).
1Measured by whether or not their household equivalised income is in the bottom 20%.