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Journal Article

Measuring the impacts of health conditions on work incapacity – evidence from the British Household Panel Survey

Authors

Publication date

Mar 2015

Abstract

The UK has experienced substantial increases in the number of individuals claiming work incapacity benefit (IB) and the proportion of people claiming IB for mental health reasons. Following high-profile reports claiming that intervention would cost the State nothing, the Government has increased the availability of psychological therapies. The cost-neutrality claim relied on two statistics: the proportion of IB claimants diagnosed with mental and behavioural disorders; and estimates of the costs to the State of periods on IB. These are cross-sectional associations. We subject these two associations to more rigorous longitudinal analysis using nationally representative data from seventeen waves (1991-2007) of the British Household Panel Survey (BHPS). We model the effect of depression on (a) State transfers and (b) the probability of being on IB whilst controlling for covariates and unobservable heterogeneity. Our results reveal that cross-sectional associations with depression are substantially confounded. The estimated effects of becoming depressed on State transfers reduce by 83% and 88%, and on the probability of claiming IB drop to just 0.4 and 0.7 percentage points, for males and females respectively. We conclude that the stated benefits of reducing depression for the State and for labour market participation have been substantially over-estimated.

Published in

Social Policy & Administration

Volume and page numbers

49 , 213 -235

DOI

http://dx.doi.org/10.1111/spol.12120

ISSN

16

Subjects

Disability, Welfare Benefits, and Health

Links

University of Essex, Albert Sloman Library Periodicals *restricted to University of Essex registered users* - http://serlib0.essex.ac.uk/record=b1587016~S5


Related publications

  1. Mental health, work incapacity and State transfers: an analysis of the British Household Panel Survey

    William Whittaker and Matthew Sutton

    1. Disability
    2. Welfare Benefits
    3. Health

#524729


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