Welfare Reform and Mental Health

A primary role of the welfare state is to provide a safety net against adverse shocks such as becoming unemployed. We estimate the effect of a major welfare reform in the UK on mental health for unemployed claimants. In 2013 Universal Credit replaced six existing benefits, creating a simplified system of applications and payments, whilst simultaneously applying somewhat draconian policy rules including a commitment to intensive job search, a change in benefit income and a 5 week wait to receive the first benefit payment. Exploiting a staggered roll-out across areas and time, we find whilst the former welfare system mitigated mental health effects of entering unemployment, Universal Credit exacerbated mental health problems by 28% of a standard deviation. We decompose this effect into the proportion coming from the individual policy rules, finding that a cut in income worsened - whilst increased job search intensity protected - against mental health problems from entering unemployment.

Joint work with Mike Brewer and Thang Dang

• If you want to attend this online seminar, you need to register here. You will then receive the details of the zoom session by email.

• Your microphone will be on mute upon joining the meeting, please leave it like that and unmute it only if you want to ask a question.

• Asking questions: please just go ahead and ask questions in the “usual way” (ie, don’t use the chat unless you want to notify the host of any problem related to seminar).

• Please use the registration form also to register for a Zoom bilateral on the day of the seminar. Deadline for requesting a bilateral is Thursday 6 May at 09:00.