two anonymous referees for comments on an earlier draft. The professionalism of the Australian Bureau of Statistics Consultancy Unit in estimating the synthetic panel models is greatly appreciated. All remaining errors and omissions are the sole responsibility of the authors. The views expressed in this article do not necessarily reflect those of the Australian Institute of Family Studies.
AbstractData from the 1981, 1986, 1991 and 1996 cen-suses are used to construct a synthetic panel which is used to conduct the first longitudinal estimates of the determinants of the probability of employment and participating in the labour force for Indigenous and non-Indigenous males and females. The major contribution of the article is to produce estimates of the effects of educational attainment which control for the effects of unobserved heterogeneity using 10year age cohorts. This article demonstrates that the determinants of labour force status differ between the Indigenous and non-Indigenous populations and illustrates the need to use longitudinal techniques to control for important unobservable characteristics.