IDEAS home Printed from https://ideas.repec.org/a/eee/jhecon/v98y2024ics0167629624000857.html
   My bibliography  Save this article

Universal Credit: Welfare reform and mental health

Author

Listed:
  • Brewer, Mike
  • Dang, Thang
  • Tominey, Emma

Abstract

The UK Universal Credit (UC) welfare reform simplified the benefits system whilst strongly incentivising a return to sustainable employment. Exploiting a staggered roll-out, we estimate the differential effect of unemployment under UC versus the former system on mental health. Groups with fewer insurance possibilities – single adults and lone parents – experience a mental health deterioration of 8.4-13.9% standard deviations which persists into the subsequent year. For couples, UC partially or fully mitigates mental health consequences of unemployment. Exploring mechanisms, for single adults and lone parents, reduced benefit income and strict job search requirements dominate any positive welfare effects of the reduced administrative burden of claiming benefits.

Suggested Citation

  • Brewer, Mike & Dang, Thang & Tominey, Emma, 2024. "Universal Credit: Welfare reform and mental health," Journal of Health Economics, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:jhecon:v:98:y:2024:i:c:s0167629624000857
    DOI: 10.1016/j.jhealeco.2024.102940
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167629624000857
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jhealeco.2024.102940?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robert Paul Hartley & Carlos Lamarche & James P. Ziliak, 2022. "Welfare Reform and the Intergenerational Transmission of Dependence," Journal of Political Economy, University of Chicago Press, vol. 130(3), pages 523-565.
    2. James J. Heckman & Rodrigo Pinto, 2015. "Econometric Mediation Analyses: Identifying the Sources of Treatment Effects from Experimentally Estimated Production Technologies with Unmeasured and Mismeasured Inputs," Econometric Reviews, Taylor & Francis Journals, vol. 34(1-2), pages 6-31, February.
    3. Clément de Chaisemartin & Xavier D'Haultfœuille, 2020. "Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects," American Economic Review, American Economic Association, vol. 110(9), pages 2964-2996, September.
    4. Thiemo Fetzer, 2019. "Did Austerity Cause Brexit?," American Economic Review, American Economic Association, vol. 109(11), pages 3849-3886, November.
    5. repec:mpr:mprres:5070 is not listed on IDEAS
    6. Andrew Gelman & Guido Imbens, 2013. "Why ask Why? Forward Causal Inference and Reverse Causal Questions," NBER Working Papers 19614, National Bureau of Economic Research, Inc.
    7. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2005. "Welfare Reform and Health," Journal of Human Resources, University of Wisconsin Press, vol. 40(2).
    8. Martha J Bailey & Hilary Hoynes & Maya Rossin-Slater & Reed Walker, 2024. "Is the Social Safety Net a Long-Term Investment? Large-Scale Evidence From the Food Stamps Program," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(3), pages 1291-1330.
    9. Brett Watson & Mouhcine Guettabi & Matthew Reimer, 2020. "Universal Cash and Crime," The Review of Economics and Statistics, MIT Press, vol. 102(4), pages 678-689, October.
    10. Katz, Lawrence F. & Meyer, Bruce D., 1990. "The impact of the potential duration of unemployment benefits on the duration of unemployment," Journal of Public Economics, Elsevier, vol. 41(1), pages 45-72, February.
    11. Marta C. Lopes, 2022. "A review on the elasticity of unemployment duration to the potential duration of unemployment benefits," Journal of Economic Surveys, Wiley Blackwell, vol. 36(4), pages 1212-1224, September.
    12. Rafael Lalive, 2007. "Unemployment Benefits, Unemployment Duration, and Post-Unemployment Jobs: A Regression Discontinuity Approach," American Economic Review, American Economic Association, vol. 97(2), pages 108-112, May.
    13. Tominey, Emma, 2016. "Female labour supply and household employment shocks: Maternity leave as an insurance mechanism," European Economic Review, Elsevier, vol. 87(C), pages 256-271.
    14. Viviana Celli, 2019. "Causal Mediation Analysis in Economics: objectives, assumptions, models," Working Papers 12/19, Sapienza University of Rome, DISS.
    15. Goodman-Bacon, Andrew, 2021. "Difference-in-differences with variation in treatment timing," Journal of Econometrics, Elsevier, vol. 225(2), pages 254-277.
    16. William N. Evans & Craig L. Garthwaite, 2014. "Giving Mom a Break: The Impact of Higher EITC Payments on Maternal Health," American Economic Journal: Economic Policy, American Economic Association, vol. 6(2), pages 258-290, May.
    17. Ariel Kalil & Hope Corman & Dhaval M. Dave & Ofira Schwartz-Soicher & Nancy Reichman, 2022. "Welfare Reform and the Quality of Young Children's Home Environments," NBER Working Papers 30407, National Bureau of Economic Research, Inc.
    18. Lindsey Macmillan & Emma Tominey, 2023. "Parental inputs and socio-economic gaps in early child development," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(3), pages 1513-1543, July.
    19. Brown, Sarah & Harris, Mark N. & Srivastava, Preety & Taylor, Karl, 2018. "Mental Health and Reporting Bias: Analysis of the GHQ-12," IZA Discussion Papers 11771, Institute of Labor Economics (IZA).
    20. Card, David & Levine, Phillip B., 2000. "Extended benefits and the duration of UI spells: evidence from the New Jersey extended benefit program," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 107-138, October.
    21. Manudeep Bhuller & Gordon B. Dahl & Katrine V. Løken & Magne Mogstad, 2024. "Domestic Violence Reports and the Mental Health and Well-Being of Victims and Their Children," Journal of Human Resources, University of Wisconsin Press, vol. 59(S), pages 152-186.
    22. Kirill Borusyak & Xavier Jaravel & Jann Spiess, 2024. "Revisiting Event-Study Designs: Robust and Efficient Estimation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(6), pages 3253-3285.
    23. Borjas, George J., 2003. "Welfare reform, labor supply, and health insurance in the immigrant population," Journal of Health Economics, Elsevier, vol. 22(6), pages 933-958, November.
    24. Mike Brewer & Hilary Hoynes, 2019. "In‐Work Credits in the UK and the US," Fiscal Studies, John Wiley & Sons, vol. 40(4), pages 519-560, December.
    25. Paul Gregg & Susan Harkness & Sarah Smith, 2009. "Welfare Reform and Lone Parents in the UK," Economic Journal, Royal Economic Society, vol. 119(535), pages 38-65, February.
    26. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
    27. Mike Brewer & James Browne & Wenchao Jin, 2012. "Universal Credit: A Preliminary Analysis of Its Impact on Incomes and Work Incentives," Fiscal Studies, Institute for Fiscal Studies, vol. 33(1), pages 39-71, March.
    28. Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December.
    29. Petter Lundborg & Dan-Olof Rooth & Jesper Alex-Petersen, 2022. "Long-Term Effects of Childhood Nutrition: Evidence from a School Lunch Reform," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(2), pages 876-908.
    30. Brewer, Mike & Duncan, Alan & Shephard, Andrew & Suarez, Maria Jose, 2006. "Did working families' tax credit work? The impact of in-work support on labour supply in Great Britain," Labour Economics, Elsevier, vol. 13(6), pages 699-720, December.
    31. Hausman, J. A. & Abrevaya, Jason & Scott-Morton, F. M., 1998. "Misclassification of the dependent variable in a discrete-response setting," Journal of Econometrics, Elsevier, vol. 87(2), pages 239-269, September.
    32. Rocco d’Este & Alex Harvey, 2024. "The Unintended Consequences of Welfare Reforms: Universal Credit, Financial Insecurity, and Crime," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 40(1), pages 129-181.
    33. Vivian H. Hamilton & Philip Merrigan & Éric Dufresne, 1997. "Down and out: estimating the relationship between mental health and unemployment," Health Economics, John Wiley & Sons, Ltd., vol. 6(4), pages 397-406, July.
    34. Aline Bütikofer & Julie Riise & Meghan M. Skira, 2021. "The Impact of Paid Maternity Leave on Maternal Health," American Economic Journal: Economic Policy, American Economic Association, vol. 13(1), pages 67-105, February.
    35. Sarah Baird & Jacobus de Hoop & Berk Özler, 2013. "Income Shocks and Adolescent Mental Health," Journal of Human Resources, University of Wisconsin Press, vol. 48(2), pages 370-403.
    36. Ioana Marinescu & Daphné Skandalis, 2021. "Unemployment Insurance and Job Search Behavior," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(2), pages 887-931.
    37. Eva Deuchert & Martin Huber & Mark Schelker, 2019. "Direct and Indirect Effects Based on Difference-in-Differences With an Application to Political Preferences Following the Vietnam Draft Lottery," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 37(4), pages 710-720, October.
    38. d'Este, Rocco & Harvey, Alex, 2020. "Universal Credit and Crime," IZA Discussion Papers 13484, Institute of Labor Economics (IZA).
    39. Nickell, Stephen J, 1979. "Estimating the Probability of Leaving Unemployment," Econometrica, Econometric Society, vol. 47(5), pages 1249-1266, September.
    40. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    41. McInerney, Melissa & Mellor, Jennifer M. & Nicholas, Lauren Hersch, 2013. "Recession depression: Mental health effects of the 2008 stock market crash," Journal of Health Economics, Elsevier, vol. 32(6), pages 1090-1104.
    42. Walter Nicholson & Karen Needels, 2006. "Unemployment Insurance: Strengthening the Relationship between Theory and Policy," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 47-70, Summer.
    43. Cody Tuttle, 2019. "Snapping Back: Food Stamp Bans and Criminal Recidivism," American Economic Journal: Economic Policy, American Economic Association, vol. 11(2), pages 301-327, May.
    44. Boyd-Swan, Casey & Herbst, Chris M. & Ifcher, John & Zarghamee, Homa, 2016. "The earned income tax credit, mental health, and happiness," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PA), pages 18-38.
    45. Tefft, Nathan, 2011. "Insights on unemployment, unemployment insurance, and mental health," Journal of Health Economics, Elsevier, vol. 30(2), pages 258-264, March.
    46. Narendranathan, W & Nickell, S & Stern, J, 1985. "Unemployment Benefits Revisited," Economic Journal, Royal Economic Society, vol. 95(378), pages 307-329, June.
    47. Chris Herbst, 2013. "Welfare reform and the subjective well-being of single mothers," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(1), pages 203-238, January.
    48. Huber, Martin, 2019. "A review of causal mediation analysis for assessing direct and indirect treatment effects," FSES Working Papers 500, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mike Brewer & Thang Dang & Emma Tominey, 2023. "Welfare reform: Employment, mental health and intrahousehold insurance," CEPEO Working Paper Series 23-06, UCL Centre for Education Policy and Equalising Opportunities.
    2. Diogo G. C. Britto & Paolo Pinotti & Breno Sampaio, 2022. "The Effect of Job Loss and Unemployment Insurance on Crime in Brazil," Econometrica, Econometric Society, vol. 90(4), pages 1393-1423, July.
    3. Acosta, Miguel & Mueller, Andreas I. & Nakamura, Emi & Steinsson, Jon, 2023. "Macroeconomic Effects of UI Extensions at Short and Long Durations," CEPR Discussion Papers 18534, C.E.P.R. Discussion Papers.
    4. Guo, Naijia & Huang, Wei & Wang, Ruixin, 2025. "Public pensions and family dynamics: Eldercare, child investment, and son preference in rural China," Journal of Development Economics, Elsevier, vol. 172(C).
    5. Coraggio, Luca & Pagano, Marco & Scognamiglio, Annalisa & Tåg, Joacim, 2025. "JAQ of all trades: Job mismatch, firm productivity and managerial quality," Journal of Financial Economics, Elsevier, vol. 164(C).
    6. Cl'ement de Chaisemartin & Xavier D'Haultf{oe}uille, 2021. "Two-Way Fixed Effects and Differences-in-Differences with Heterogeneous Treatment Effects: A Survey," Papers 2112.04565, arXiv.org, revised Jun 2022.
    7. Paul Bingley & Lorenzo Cappellari & Marco Ovidi, 2023. "When it hurts the most: timing of parental job loss and a child’s education," LISER Working Paper Series 2023-12, Luxembourg Institute of Socio-Economic Research (LISER).
    8. Emmanuel Duguet & Florent Frémigacci & Yannick L’Horty, 2008. "Indemnisation du chômage et retour à l’emploi : un examen économétrique," Documents de recherche 08-07, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    9. Sophie Hatte & Jordan Loper & Thomas Taylor, 2025. "Connecting the Unconnected: Facebook Access and Female Political Representation in Sub-Saharan Africa," CERDI Working papers hal-05056150, HAL.
    10. Balia, S.; & Brau, R.; & Pau, S.;, 2025. "One plus one makes less than two? Consolidation policies and mortality in the Italian NHS," Health, Econometrics and Data Group (HEDG) Working Papers 25/02, HEDG, c/o Department of Economics, University of York.
    11. Fabre, Brice & Sangnier, Marc, 2025. "Where and why do politicians send pork? Evidence from central government transfers to French municipalities," Journal of Public Economics, Elsevier, vol. 241(C).
    12. Esra Kose & Siobhan M. O'Keefe & Maria Rosales-Rueda, 2022. "Does the Delivery of Primary Health Care Improve Birth Outcomes? Evidence from the Rollout of Community Health Centers," NBER Working Papers 30047, National Bureau of Economic Research, Inc.
    13. Qiu, Huanguang & Hong, Junqiao & Wang, Xiangrui & Filipski, Mateusz, 2024. "Home sweet home: Impacts of living conditions on worker migration with evidence from randomized resettlement in China," Journal of Economic Behavior & Organization, Elsevier, vol. 220(C), pages 558-583.
    14. Philipp Barteska & Jay Euijung Lee, 2025. "Personnel is policy (implementation): Bureaucrats and the Korean export miracle," CEP Discussion Papers dp2099, Centre for Economic Performance, LSE.
    15. Niklas Potrafke & Luisa Dörr & Klaus Gründler & Tuuli Tähtinen & Luisa Dörr, 2025. "Female Leaders and the Representation of Women in Government," CESifo Working Paper Series 11851, CESifo.
    16. Mantovani, Andrea & Reggiani, Carlo & Broocks, Annette & Duch-Brown, Nestor & Ma, Peiyao, 2022. "The Price Effects of Banning Price Parity Clauses in the EU: Evidence from International Hotel Groups," TSE Working Papers 22-1371, Toulouse School of Economics (TSE).
    17. Joop Age Harm Adema & Cevat Giray Aksoy & Panu Poutvaara, 2021. "Mobile Internet Access and the Desire to Emigrate," ifo Working Paper Series 365, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    18. Elisa Facchetti & Lorenzo Neri & Marco Ovidi, 2021. "Should you Meet The Parents? The impact of information on non-test score attributes on school choice," DISCE - Working Papers del Dipartimento di Economia e Finanza def113, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    19. 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).
    20. Pinotti, Paolo & Bhalotra, Sonia & Britto, Diogo & Sampaio, Breno, 2021. "Job Displacement, Unemployment Benefits and Domestic Violence," CEPR Discussion Papers 16350, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Welfare reform; Mental health; Mediation; Universal Credit;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jhecon:v:98:y:2024:i:c:s0167629624000857. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505560 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.