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Health, disability insurance and labour force participation

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  • Brian Bell
  • James Smith

Abstract

Over half a million men of working age left the labour market over the course of the 1990s. In this paper this remarkable decline is explored, and the roles played by the interaction of skills, long-term sickness and the disability benefit system are highlighted. The analysis shows that the decline in participation was almost exclusively among unskilled males and that this same group reported increasing long-term illness. The generosity of the disability insurance system relative to that of the unemployment insurance appears to have encouraged such workers to exit the labour market. Strong evidence is presented of sizable labour supply responses to disability insurance benefits, which would support that hypothesis. But it seems unlikely that this 1990s' experience will be repeated as disability benefits are now much less generous than they were at that time.

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  • Brian Bell & James Smith, 2004. "Health, disability insurance and labour force participation," Bank of England working papers 218, Bank of England.
    • Handle: RePEc:boe:boeewp:218
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    File URL: http://www.bankofengland.co.uk/research/Documents/workingpapers/2004/WP218.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Duncan McVicar, 2008. "Why Have Uk Disability Benefit Rolls Grown So Much?," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 114-139, February.
    2. Hamish Low & Luigi Pistaferri, 2020. "Disability Insurance: Theoretical Trade‐Offs and Empirical Evidence," Fiscal Studies, John Wiley & Sons, vol. 41(1), pages 129-164, March.
    3. Christina Beatty & Stephen Fothergill, 2005. "The diversion from 'unemployment' to 'sickness' across British regions and districts," Regional Studies, Taylor & Francis Journals, vol. 39(7), pages 837-854.
    4. Miethlich, Boris & Šlahor, Ľudomír, 2018. "Creating shared value through implementing vocational rehabilitation in the corporate social responsibility strategy: A literature review," EconStor Conference Papers 196182, ZBW - Leibniz Information Centre for Economics.
    5. Jennifer Roberts & Karl Taylor, 2022. "New Evidence on Disability Benefit Claims in Britain: The Role of Health and the Local Labour Market," Economica, London School of Economics and Political Science, vol. 89(353), pages 131-160, January.
    6. Danacica, Daniela Emanuela & Cirnu, Doru, 2014. "Unemployment Duration and Exit States of Disabled People in Romania," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 35-52, March.
    7. Maria Guti'rrez-DomSnech & Brian Bell, 2004. "Female labour force participation in the United Kingdom: evolving characteristics or changing behaviour?," Bank of England working papers 221, Bank of England.
    8. Faggio, Giulia & Nickell, Stephen, 2005. "Inactivity among prime age men in the UK," LSE Research Online Documents on Economics 19912, London School of Economics and Political Science, LSE Library.
    9. Maja Prudzienica, 2012. "Disabled Persons on Labour Market - Analysis of Solutions in Poland and Selected EU Countries," MIC 2012: Managing Transformation with Creativity; Proceedings of the 13th International Conference, Budapest, 22–24 November 2012 [Selected Papers],, University of Primorska, Faculty of Management Koper.
    10. Morten Nordberg, 2008. "Employment Behaviour of Marginal Workers: The Roles of Preferences and Opportunities," LABOUR, CEIS, vol. 22(3), pages 411-445, September.
    11. Mark Schweitzer & David Tinsley, 2004. "The UK labour force participation rate: business cycle and trend influences," Bank of England working papers 228, Bank of England.
    12. Nagymate, Nora, 2013. "Relationship Between The Qualification And Labour Market Situation Of Disabled Workers In Hungary," APSTRACT: Applied Studies in Agribusiness and Commerce, AGRIMBA, vol. 6(5), pages 1-3, April.
    13. Duncan McVicar & Michael Anyadike-Danes, 2010. "Panel estimates of the determinants of British regional male incapacity benefits rolls 1998-2006," Applied Economics, Taylor & Francis Journals, vol. 42(26), pages 3335-3349.
    14. Richard Berthoud, 2008. "Disability employment penalties in Britain," Work, Employment & Society, British Sociological Association, vol. 22(1), pages 129-148, March.
    15. David Webster, 2006. "Welfare Reform: Facing up to the Geography of Worklessness," Local Economy, London South Bank University, vol. 21(2), pages 107-116, May.
    16. Roberts, Jennifer & Taylor, Karl, 2019. "New Evidence on Disability Benefit Claims in the UK: The Role of Health and the Local Labour Market," IZA Discussion Papers 12825, Institute of Labor Economics (IZA).
    17. Nordberg, Morten, 2007. "Employment behaviour of marginal workers," Memorandum 06/2007, Oslo University, Department of Economics.
    18. Melanie K. Jones & Jonathan Jones, 2008. "The Labour Market Impact Of The Uk Disability Discrimination Act: Evidence From The Repeal Of The Small Firm Exemption," Bulletin of Economic Research, Wiley Blackwell, vol. 60(3), pages 289-306, July.

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