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Disability Support Pension Recipients: Who Gets Off (and Stays Off) Payments?

Author

Listed:
  • Lixin Cai

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne and IZA Bonn)

  • Ha Vu

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne and IZA Bonn)

  • Roger Wilkins

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne and IZA Bonn)

Abstract

We use Centrelink payment records on Disability Support Pension (DSP) recipients over the period 1995 to 2002 to investigate individual transitions off the payment. Our analysis involves two distinct, but complementary, components. The first component, which can be represented as an ‘entry cohort’ analysis, investigates the factors associated with making a transition off DSP. The second component can be interpreted as an ‘exit cohort’ approach, whereby we examine the factors associated with sustaining an exit off all welfare payments, given that an individual has in fact made the transition from DSP to that state. Our findings are consistent with the existence of a close correspondence between disability benefit receipt and labour market outcomes: entry to DSP via unemployment benefits is associated with substantially reduced prospects of exiting DSP, while employment during the DSP spell is associated with not only an increased probability of exiting DSP, but also more success in staying off payments once an exit has been made. A further finding of our analysis is that persons who exit DSP due to take-up of employment have a relatively high rate of return to payments compared with persons who exit for other reasons, and indeed exhibit a high propensity to cycle off and on payments.

Suggested Citation

  • Lixin Cai & Ha Vu & Roger Wilkins, 2006. "Disability Support Pension Recipients: Who Gets Off (and Stays Off) Payments?," Melbourne Institute Working Paper Series wp2006n18, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2006n18
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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2006n18.pdf
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