The costs of disability in Australia: a hybrid panel-data examination

Background: This paper estimates the costs of disability in Australia using recent longitudinal data (2001-2016) from the Household, Income and Labour Dynamics in Australia Survey. Objective: To estimate the costs of disability in Australia Methods: The standard-of-living approach with a hybrid panel data model. Results: The average cost of having any disability in the short-run in Australia was 50% of disposable adult-equivalent annual income. This figure varied considerably with the severity of disability, ranging from 19% for people without work-related limitations to 102% for people with severe limitations. The average cost of disability in the long-run was higher at 63% of adult-equivalent disposable income. This was distributed more evenly across severity levels, ranging from 37% for people with no work-related limitations to 94% for people with severe limitations. Conclusions: First, the living standard is lower in households with people with a disability compared to households without members with a disability. Current poverty measures fail to consider substantial differences in poverty rates between people with and without a disability. Second, the estimated costs reflected in this study do consider forgone income due to disability. Third, increasing the income or providing subsidised services for people with a disability may increase the financial satisfaction of these people, leading to an improved living standard