Labor Market Entry Dynamics and Mental Health Outcomes among Young People with and without Disability

Abstract

Young people with disability face significant barriers to stable employment. Yet, little is known about how early labor market experiences shape their long-term mental health. This study examines associations between early career insecurity and subsequent mental health trajectories, focusing on disability status as a key axis of inequality. We use nationally representative longitudinal data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, following 1525 individuals aged 16 to 55 years over the period 2001 to 2022. Early career employment insecurity during the first five years after leaving education is constructed using sequence analysis, capturing the joint occurrence and accumulation of contract insecurity, underemployment, and economic inactivity. Disability status is operationalized using a binary indicator representing a broad category including people with diverse disabilities. Mental health outcomes are measured using the five-item Mental Health Inventory (MHI-5) and modeled across time using random-effects panel models. We find a negative association between early career insecurity and later mental health, net of confounders. This association is significantly more pronounced among individuals with disability. A one-unit change in the insecurity index is associated with an approximately 13-point (about 60% of the standard deviation) lower mental health score among young people with disability. For young people without disability the association amounts to about 5-point (about 30% of the standard deviation) lower mental health scores. For respondents with disability, exposure to trajectories characterized by overlapping periods of insecure employment and underemployment in early adulthood is associated with persistently lower later mental health scores. These results highlight the importance of multidimensional measures of employment precarity for understanding mental health inequalities and demonstrate how disability amplifies the long-term mental health consequences of early labor market instability. The findings underscore the need for more inclusive and secure employment pathways to support young people's mental health.