Path Dependence in Disability

Working paper number: 
2020-57
Paper Abstract: 
The average prevalence of disability in most African countries is 10% but for many it exceeds the global disability prevalence rate of 15%. The extent to which this disability capturing functional and activity limitations results in permanent job loss, lowered lifetime income, and assets, in part, depends upon the extent to which the onset of limitations becomes permanent. In this paper we use five rounds of longitudinal data from rural Malawi, a low income African country with high prevalence of disability, to examine path dependence in activity limitations. We estimate a dynamic linear panel data model where the coefficient on the one-period lagged health outcome captures path dependence in limitations. Our preferred Arellano-Bover estimates show that males experience persistence in both the incidence and intensity of severe limitations but are able to recover from all other limitations, whereas, females exhibit no significant persistence on any type of limitations. Our findings have important policy implications for computing the long-term costs associated with onsets of activity limitations as these costs can be moderated by the recovery exhibited in these limitations.