Measuring the Impacts of Health Conditions on Work Incapacity - Evidence from the British Household Panel Survey

This chapter aims to accurately identify the causal pathway between health and claiming disability benefits (DBs) by addressing several of the modelling problems in the existing literature. It uses nationally representative, individual-level, longitudinal survey data from the British Household Panel Survey (BHPS) to model influences on the probability of claiming DBs. The chapter also includes multiple health conditions to allow control confounding of the estimated effects of particular health conditions. The results reveal that a positive association between depression and the probability of claiming DBs, but this effect is reduced, though remains statistically significant and positive, when there is control over other factors. Comparing across the health conditions, depression had the highest effect on the probability of claiming DBs. There is no significant effect of area wage rates for either gender. Behind this analysis lies an assumption that claiming work incapacity benefits is detrimental to both the government and individual.