Panel estimates of the determinants of British regional male incapacity benefits rolls 1998–2006

Abstract

This article explores the determinants of the proportion of the working age male population claiming Incapacity Benefits (IB), across the 11 British Government Office Regions, for the period 1998 to 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 nonstationary 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.