Disability Onset, Disability Exit, and Welfare Benefit Receipt

This paper exploits rarely-used longitudinal data for the UK to examine the impacts of disability onset and disability exit on benefit receipt over the period 2004-2012, combining propensity score matching with... [ view full abstract ]

This paper exploits rarely-used longitudinal data for the UK to examine the impacts of disability onset and disability exit on benefit receipt over the period 2004-2012, combining propensity score matching with difference-in-differences methods to draw plausibly causal inferences under explicit assumptions. Disability onset increases receipt of disability insurance among the onset group by 3-9 percentage points in the first year, a wider measure of sickness and disability benefits by 3-13 percentage points, and a measure for receipt of any non-universal benefits by 3-21 percentage points. There are further small increases in receipt of disability insurance and sickness and disability benefits the following year, with all net additional recipients drawn from elsewhere in the welfare system. Onset effects are larger for mental health conditions, more severe disability onset, and for those who do not report an existing long term health condition. Onset effects do not vary substantially by individual characteristics, with the partial exception of education level. The impact of work-limiting disability onset on disability insurance receipt is larger under a regime with less rigorous screening and conditionality. Evidence on disability exit effects is mixed and estimates are sensitive to modelling assumptions: some suggest negative impacts on benefit receipt; others suggest no impact.