Unemployment Duration and Inflows onto the Disability Support Pension Program: Evidence from FaCS LDS Data

From the administrative data of the Australian Department of Family and Community Services it is found that a large proportion of Disability Support Pension (DSP) recipients transferred from unemployment benefits. Among those who transferred to DSP from unemployment benefits, a large proportion experienced multiple spells of income support receipt prior to the transition and a majority had more than a half-year pre-transition unemployment duration, with the average pre-transition unemployment duration being more than one year. These findings suggest that the unemployment benefit is not simply a'hold-on' benefit for those who experienced the unemployment-DSP transition. This article further examines what factors are associated with the transition. It is found that, among other things, the probability of transition to DSP from unemployment increases with duration on unemployment benefits. Copyright 2005 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research.