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Does capping social security harm health? A natural experiment in the UK

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  • Reeves, Aaron
  • Fransham, Mark
  • Stewart, Kitty
  • Patrick, Ruth

Abstract

In this paper, we examine the mental health effects of lowering the UK's benefit cap in 2016. This policy limits the total amount a household with no-one in full-time employment can receive in social security. We treat the reduction in the cap as a natural policy experiment, comparing those at risk of being capped and those who were not, and examining the risk of experiencing poor mental health both before and after the cap was lowered. Drawing on data from ~900,000 individuals, we find that the prevalence of depression or anxiety among those at risk of being capped increased by 2.6 percentage points (95% confidence interval: 1.33–3.88) compared with those at a low risk of being capped. Capping social security may increase the risk of mental ill health and could have the unintended consequence of pushing out-of-work people even further away from the labour market.

Suggested Citation

  • Reeves, Aaron & Fransham, Mark & Stewart, Kitty & Patrick, Ruth, 2022. "Does capping social security harm health? A natural experiment in the UK," LSE Research Online Documents on Economics 111825, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:111825
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    File URL: http://eprints.lse.ac.uk/111825/
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    References listed on IDEAS

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    1. García-Gómez, Pilar & Jones, Andrew M. & Rice, Nigel, 2010. "Health effects on labour market exits and entries," Labour Economics, Elsevier, vol. 17(1), pages 62-76, January.
    2. repec:cep:sticar:case/96 is not listed on IDEAS
    3. Brewer Mike & Crossley Thomas F. & Joyce Robert, 2018. "Inference with Difference-in-Differences Revisited," Journal of Econometric Methods, De Gruyter, vol. 7(1), pages 1-16, January.
    4. Jeffrey Grogger, 2002. "The Behavioral Effects of Welfare Time Limits," American Economic Review, American Economic Association, vol. 92(2), pages 385-389, May.
    5. Simpson, Julija & Albani, Viviana & Bell, Zoe & Bambra, Clare & Brown, Heather, 2021. "Effects of social security policy reforms on mental health and inequalities: A systematic review of observational studies in high-income countries," Social Science & Medicine, Elsevier, vol. 272(C).
    6. Dunning,Thad, 2012. "Natural Experiments in the Social Sciences," Cambridge Books, Cambridge University Press, number 9781107017665, November.
    7. Dunning,Thad, 2012. "Natural Experiments in the Social Sciences," Cambridge Books, Cambridge University Press, number 9781107698000, November.
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    Cited by:

    1. Ruth Patrick & Aaron Reeves & Kitty Stewart, 2023. "The sins of the parents: Conceptualising adult-oriented reforms to family policy," CASE Papers /228, Centre for Analysis of Social Exclusion, LSE.
    2. Stewart, Kitty & Patrick, Ruth & Reeves, Aaron, 2023. "The sins of the parents: conceptualising adult-oriented reforms to family policy," LSE Research Online Documents on Economics 121533, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    welfare reform; mental health; benefit cap; social security; WEL/43806; DP190101188; 220206/Z/20/Z;
    All these keywords.

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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