Reducing Benefit Dependence

David A Preston

Benefit dependence among working-age adults is a key social policy issue of our times. The growth in numbers dependent on the state is now a pressing problem in almost all developed countries with significant welfare states. It acts as a drain on the social and economic system and marginalises substantial groups in the population. However, much benefit dependence seems to be avoidable, or at least reduceable, provided the economy and labour market are functioning adequately.

This paper summarises the issues and sets out the key elements of potentially successful strategies for reducing benefit dependence. These include the financial incentives and disincentives that are part of the traditional debate about the structure of the benefit system, but for the groups most likely to drift into long-term benefit dependence a more interventionist strategy also seems to be required, especially where there are major constraints on the degree of feasible change in financial incentives.

Some of the new elements of intervention loosely described as “case management” seem to offer significant possibility for reducing the economic and social cost of benefit dependence.