Successful Benefit-to-Work Transitions? The Longer-term Outcomes of People who Move from a Working-age Benefit to Employment

This study uses data from New Zealandís Linked Employer-Employee Database (LEED) to examine the longer-term employment outcomes of adults who moved from a government income support benefit to employment. The main study population is all those who made such a benefit-to-work (BTW) transition during 2001/02. They are observed for two years before and after the transition. We find that people in the BTW transition group remained employed and off benefits for much of the post-transition period (72 percent of the first year on average, and 61 percent of the second). Part-time or part-month employment was common, however: at any given time approximately one-third of those in employment had part-time or part-month earnings. More than half received some further benefit income during the two years after the transition. Those who had some employment in the final six months (78 percent) experienced an 8.5 percent increase in their average monthly earnings, at the median. An analysis of the factors associated with successful outcomes for people moving from a benefit to employment suggests that personal characteristics, prior employment experience, the timing and nature of the transition, and the characteristics of post-transition employers all play some role. However, the analysis does not allow us to fully distinguish between associative and causal effects. The study also compares the employment outcomes of the BTW transition group with those of non-beneficiaries who began a new waged or salaried job in the same year, with and without controls for differences in measured characteristics. The results of these comparisons are informative but not entirely conclusive.