Academic journal article Social Policy Journal of New Zealand

The Longer-Term Employment Outcomes of People Who Move from a Benefit to Work

Academic journal article Social Policy Journal of New Zealand

The Longer-Term Employment Outcomes of People Who Move from a Benefit to Work

Article excerpt

Abstract

This article reports results from a study that used Linked Employer-Employee Data (LEED) to examine the longer-term employment outcomes of people who moved from a government income support benefit to employment during 2001/02. The study population was observed for two years before and after the benefit-to-work transition. The study described short-term and longer-term employment retention rates and earnings growth patterns, and compared the outcomes of the benefit-to-work study population with those of non-beneficiaries who began a job in the same year. It also investigated some of the factors that are associated with more or less "successful" outcomes, including personal characteristics, prior employment experiences, the timing and nature of the benefit-to-work transition, and the characteristics of post-transition employers. Employment retention rates were found to be moderately high in the two-year follow-up period, but at any given time around one-third of those with jobs were earning less than $1,500 a month, indicating that they probably were not employed full-time or for a full month. Jobs also tended to be short in duration. More than half of the study group returned to a benefit during the follow-up period.

INTRODUCTION

People who move from an income support benefit to work do not always stay employed for long. The international literature indicates that former welfare recipients often struggle to retain employment, cycle between short-term jobs and welfare, and can remain in low-paid situations for extended periods. (2) An important goal of employment policy is to assist people who have had lengthy spells of income support to return to work, remain employed and improve their skills and incomes over time.

This article reports a selection of findings from a study that used Linked Employer-Employee Data (LEED) to examine the longer-term employment outcomes of people who moved from a working-age benefit to employment in 2001/02. (3) LEED is a new data source that provides comprehensive national data on taxable income payments from April 1999 to the present. Employee earnings and income received from social welfare benefits are separately identified. Individuals and employers in LEED have unique identifiers that enable longitudinal linking of records. The data can therefore be used to study individuals' transitions between employment states and onto and off benefits, as well as their transitions between employers. (4)

The study had three main objectives. First, it described the benefit-to-work experiences of a large sample of former beneficiaries. We constructed a variety of different measures of both short-term and longer-term outcomes for people who moved from a main benefit to employment during 2001/02, in order to provide a reasonably detailed picture of post-benefit employment outcomes. We aimed to identify what proportions achieved continuity in their employment, had monthly earnings that were above a minimum level consistent with full-time employment, and improved their earnings over time.

Second, the study examined the effects of factors such as demographic characteristics, prior employment experience, mobility between employers, and employer characteristics on individuals' employment and earnings outcomes, using regression methods and a richer set of explanatory variables than has been used in previous research. Building on but extending the work of Hyslop et al. (2004), we identified changes of employer at the time of the benefit-to-work transition and subsequently, and used this information in our models of outcomes. We also incorporated information on the characteristics of post-transition employers, including their industry, number of employees, payroll per employee, expansion or contraction of employment, and employee turnover rate.

Third, the study compared the employment outcomes of people who moved from benefits to employment with the outcomes of non-beneficiaries who began a new job in the same reference year. …

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