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Growth of the Benefit System in UK

Bhattarai, Keshab



The benefit system has expanded by ten times in the UK after the adoption the Beveridge social security system in 1940s. It has protected vulnerable people but also brought price distortions and adverse consequences in the economy. Efficiency issues relating to the this benefit system are analysed theoretically applying basic theories of the conditional general equilibrium model for benefit payments, natural rate of unemployment and state-space Markov process of transitions between employment and unemployment. Empirical analysis shows that the unemployment rate and the working age population are the major reasons for increase in the number of benefit claimants. This falls with higher weekly, monthly or annual pays and the duration of spells in the benefit. At macro level the growth rates of inflation indexed benefits are inversely related to that of output and the ratio of debt to GDP. Growth rates are lower with an increase in the level of benefits. These findings are based on cross section data of 201 British counties, monthly time series of vacancies redundancies and unemployment from 1992:1 to 1212:11 and panel data of 10640 wards form 2006 to 2014.


Bhattarai, K. (2021). Growth of the Benefit System in UK. Journal of Development Economics and Finance, 2(1), 153-176

Journal Article Type Article
Acceptance Date May 11, 2021
Online Publication Date Jun 5, 2021
Publication Date Jun 5, 2021
Deposit Date Jun 9, 2021
Publicly Available Date Oct 27, 2022
Journal Journal of Development Economics and Finance
Publisher ARF India
Peer Reviewed Peer Reviewed
Volume 2
Issue 1
Pages 153-176
Keywords Tax; Benefit
Public URL
Publisher URL


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