Across Europe, disability-related social security payments represent one of the largest social insurance expenditures in developed countries, with spending often exceeding 2% of GDP across OECD nations (OECD, 2010). While these programmes are crucial in providing income security and protecting the quality of life for people with a disability or health-related limitations, they are sometimes criticised for discouraging employment.

Research led by Bouke Klein Teeselink (King's College London) and BENEFITS project partner Georgios Melios (Ethos Lab and London School of Economics) investigated recent changes to the UK’s disability benefit policy to assess the impact of such policies on employment levels. The research focused on the UK’s 2013 transition from Disability Living Allowance to the Personal Independence Payment (PIP) program. In doing so, the study provides key evidence to inform the BENEFITS project’s understanding of how social security reforms shape labour market participation and employment outcomes for people with disabilities. 

Unlike traditional disability allowance programs, PIP eligibility does not require unemployment or a demonstration of work incapacity; rather, it simply aims to cover extra costs of living with a disability. Recipients face no earnings restrictions or social security reductions when working, which eliminates the potential to disincentive employment, which can characterise other disability allowance programs.

By using a quasi-experimental research method that exploited policy changes and regional differences in assessment strictness, the study found:

• Employment levels for people with pre-existing mental health conditions remained stable, even though 5.9% more became eligible under PIP.
• Individuals with minor physical disabilities (5.6% of whom lost eligibility) did not see employment levels rise.
• Stricter eligibility assessments under PIP were linked to a small increase in employment (2.9–3.3%), likely reflecting cases where individuals with greater work capacity re-entered the labour market. This suggests that stricter assessments might filter out individuals with a greater capacity to work but who were strategically seeking benefits, prompting their return to the labour market.

These findings suggest that well-designed disability allowances, structured as cost-of-living supplements rather than income replacements, can provide financial stability and protection for vulnerable groups without discouraging participation in the workforce, when the system successfully distinguishes between genuine need and strategic behaviour.

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References:

OECD (2010), Sickness, disability and work: Breaking the barriers. a synthesis of findings across OECD countries, Technical report, Organisation for Economic Co-operation and Development. https://www.oecd.org/en/publications/2010/11/sickness-disability-and-work-breaking-the-barriers_g1g10adb.html 

Funded by the European Union. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the European Research executive Agency. Neither the European Union nor the granting authority can be held responsible for them. Project number: 101179032