Disability Support Pension Recipients: Who Gets Off (and Stays Off) Payments?

We use Centrelink payment records on Disability Support Pension (DSP) recipients over the period 1995 to 2002 to investigate individual transitions off payments. Our findings are consistent with the existence of a close correspondence between disability benefit receipt and labour market outcomes: entry to DSP via unemployment benefits is associated with substantially reduced prospects of exiting DSP, while employment during the DSP spell is associated with not only an increased probability of exiting DSP, but also more success in staying off payments once an exit has been made. A further finding of our analysis is that persons who exit DSP due to take‐up of employment have a relatively high rate of return to payments compared with persons who exit for other reasons, and indeed exhibit a high propensity to cycle off and on payments.