Can helping the sick hurt the able? Incentives, information and disruption in a welfare reform

Koenig, Felix, Petrongolo, Barbara, Van Reenen, John ORCID: 0000-0001-9153-2907 and Bagaria, Nitika (2019) Can helping the sick hurt the able? Incentives, information and disruption in a welfare reform. Economic Journal, 129 (624). 3189 - 3218. ISSN 0013-0133

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Abstract

The UK Jobcentre Plus reform sharpened bureaucratic incentives to help disability benefit recipients (relative to unemployment insurance recipients) into jobs. In the long run, the policy raised exits off diasability benefits by 10% and left unemployment outflows roughly unchanged, consistent with (i) beneficial effects of reorganising welfare offices for both groups, and (ii) a shift in bureaucrats' efforts towards getting disability benefit recipients into jobs relative to those on unemployment benefit. The policy accounted for about 30% of the decline in the aggregate disability rolls between 2003 and 2008. In the short run, however, we detect a reduction in unemployment exits and no effect on disability exits, suggesting important initial disruption effects from the big reorganisation. This highlights the difficulty of welfare reform as policymakers may focus on the short-run political costs rather than the long-run economic benefits.

Item Type:	Article
Official URL:	https://academic.oup.com/ej
Additional Information:	© 2019 Royal Economic Society.
Divisions:	Centre for Economic Performance Economics
Subjects:	H Social Sciences > HV Social pathology. Social and public welfare. Criminology H Social Sciences > HD Industries. Land use. Labor
Date Deposited:	05 Jun 2020 16:24
Last Modified:	08 Jan 2024 23:27
URI:	http://eprints.lse.ac.uk/id/eprint/105020

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