Monday, August 24, 2020

Relationship between benefit receipt and unemployment

 From MSD:

Trends in main benefit receipt are associated with the official unemployment rate

1. The Depression (D)– 1930s
2. The Wool Bust – (WB) mid-1960s
3. The First Oil Shock – (FOS) mid 1970s
4. The Second Oil Shock – (SOS) 1979 to early-1980s
5. Black Monday and the restructuring events of the 1980s and early 1990s –
(BMER) 1987-1992
6. The Asian Crises – (AC) late 1990s/early 2000s
7. The Global Financial Crises – (GFC) 2008 and arguably ongoing7
8. COVID-19 – (C19)

During the Depression (D) there were no unemployment benefits - just government work schemes.

Then there was a long sustained period of 'full' employment. This was aided by award rates, subsidies and low participation of women in the labourforce. Through stages 3,4 and 5 something unusual happened. The unemployment rate rose steeply paralleled understandably by receipt of benefits. But benefits overshot unemployment by a large margin through the early nineties and the gap has persisted since. Incapacity and sole parent benefits made the difference. If more families had remained intact the two lines would have stayed closer to each other. The male breadwinners set adrift often never worked again and ended up on invalid and sickness benefits which increasingly featured incapacity for psychiatric and psychological reasons adding to the gap.

So the title of the graph, "Trends in main benefit receipt are associated with the official unemployment rate" is on one hand an accurate description. But there were and are other social trends influencing the relationship.

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