Oxford Economic Papers, 74(3), pp 936–957
This article provides a comprehensive analysis of the dynamic relationship between disability and welfare benefit receipt in Britain. Exploiting rarely used longitudinal data, it examines the impact of disability onset and disability exit on receipt of a range of beneficial outcomes, utilizing differences in the timing of onset/exit for identification. Disability onset increases receipt of disability insurance (DI), sickness benefits, and non-sickness benefits by 6, 8, and 9 percentage points in the onset year, although almost 70% of those experiencing onset remain independent of the welfare system in the short-run. DI reforms that toughened screening, reduced generosity, and increased conditionality appear to have substantially reduced DI inflows following onset, but without affecting the overall probability of welfare receipt. Disability exit, although neglected in the literature, is common during working-age and leads to a decrease in DI (and total welfare receipt), suggesting DI is not an absorbing state.