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

Felix Koenig, Barbara Petrongolo, John van Reenen and Nitika Bagaria

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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.

JEL-codes: J01 R14 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2019-11-01
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Citations: View citations in EconPapers (7)

Published in Economic Journal, 1, November, 2019, 129(624), pp. 3189 - 3218. ISSN: 0013-0133

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http://eprints.lse.ac.uk/105020/ Open access version. (application/pdf)

Related works:
Journal Article: Can Helping the Sick Hurt the Able? Incentives, Information and Disruption in a Welfare Reform (2019)
Working Paper: Can Helping the Sick Hurt the Able? Incentives, Information and Disruption in a Welfare Reform (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:105020

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