The persistence of hidden unemployment among incapacity claimants in large parts of Britain

Abstract

Across Britain as a whole, the number of non-employed adults of working age in receipt of incapacity-related benefits substantially exceeds the number claiming unemployment benefits. This article explores the extent to which the large number of incapacity claimants hides unemployment. Building on previous methods and evidence but deploying an updated methodology to adjust for underlying differences in health, the article finds that the number of incapacity claimants who might have been expected to have been in work in a genuinely fully-employed economy remains substantial, though somewhat lower than in the early 2000s. It also finds that this hidden unemployment is disproportionately concentrated in the weaker local economies of Britain’s older industrial areas and a number of coastal towns. The benefit claims are legitimate it is argued, but the scale and location of hidden unemployment casts doubt on assumptions that the contemporary UK economy is operating close to full employment.