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Reducing the Generosity and Increasing the Conditionality of Disability Benefits: Turning the Supertanker or Squeezing the Balloon?

Author

Listed:
  • Barbara Broadway

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

  • Duncan McVicar

    (Queen's University Belfast)

Abstract

This paper examines the impact of a major Australian disability reform – the 2006 Welfare to Work reform – on welfare receipt. It uses a combination of difference-in-differences and propensity score matching to identify the treatment effect. The reform reduced the generosity and increased the conditionality of welfare payments by shifting partially disabled disability benefit claimants from disability benefits to unemployment benefits. This led to increases among partially disabled welfare recipients in the hazards for exiting welfare and for switching (back) from unemployment to disability benefits. It also led to an increase in the hazard for returning to welfare for those having previously exited welfare. Overall the reform had no impact on the probability of being on welfare 12 months or 24 months later. Disability reforms need to do more than simply reduce the generosity and tighten the conditionality of payments if they are to impact on welfare dependence among people with disability.

Suggested Citation

  • Barbara Broadway & Duncan McVicar, 2015. "Reducing the Generosity and Increasing the Conditionality of Disability Benefits: Turning the Supertanker or Squeezing the Balloon?," Melbourne Institute Working Paper Series wp2015n11, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2015n11
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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2015n11.pdf
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    References listed on IDEAS

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    Cited by:

    1. Barbara Broadway & Sonja C. Kassenboehmer, 2019. "Employment effects of job counseling for disability insurance recipients," Melbourne Institute Working Paper Series wp2019n18, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

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    More about this item

    Keywords

    Welfare reform; disability; hazard rate; propensity score matching; difference-indifferences;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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