Panel Estimates of the Determinants of British Regional Male Incapacity Benefit Rolls 1998-2006

Abstract

This paper explores the determinants of the proportion of the working age male population claiming incapacity benefits (IB), across the eleven British Government Office Regions, for the period 1998-2006. Three different approaches are adopted to modelling register dynamics: first treating IB stocks as if they were trend-stationary, albeit with persistence, and estimating reduced form models for their logs; second treating IB stocks as if they were non-stationary and examining their long run determinants plus short run equilibrium reversion properties; third focusing on the determinants of gross inflows and outflows that together drive IB stocks. Given the nature of the data no approach is ideal, yet the models provide reasonably robust evidence that labour market changes – specifically falling unemployment rates and rising real earnings – have contributed to falling male IB stocks over the period.