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The Dynamics of Social Assistance Benefit Receipt in Britain

Lorenzo Cappellari and Stephen Jenkins ()

A chapter in Safety Nets and Benefit Dependence, 2014, vol. 39, pp 41-79 from Emerald Group Publishing Limited

Abstract: We analyse the dynamics of social assistance benefit (SA) receipt among working-age adults in Britain between 1991 and 2005. The decline in the annual SA receipt rate was driven by a decline in the SA entry rate rather than by the SA exit rate (which also declined). We examine the determinants of these trends using a multivariate dynamic random effects probit model of SA receipt probabilities applied to British Household Panel Survey data. We show how the model may be used to derive year-by-year predictions of aggregate SA entry, exit and receipt rates. The analysis highlights the importance of the decline in the unemployment rate over the period and other changes in the socio-economic environment including two reforms to the income maintenance system in the 1990s and also illustrates the effects of self-selection (‘creaming’) on observed and unobserved characteristics.

Keywords: Social assistance benefits; welfare benefits; panel data; dynamic self-selection; dynamic random effects probit; I38; C23; C53 (search for similar items in EconPapers)
Date: 2014
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Related works:
Working Paper: The dynamics of social assistance benefit receipt in Britain (2009) Downloads
Working Paper: The Dynamics of Social Assistance Benefit Receipt in Britain (2009) Downloads
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DOI: 10.1108/S0147-912120140000039000

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