Does sanctioning disabled claimants of unemployment insurance increase labour market inactivity? An analysis of 346 British local authorities between 2009 and 2014

Imposing financial penalties on claimants of unemployment insurance may incentivise labour market re-entry. However, sanctions may have differential effects depending on the work-readiness of the claimants. Here, I explore whether sanctioning disabled claimants is associated with greater labour market activity or inactivity among disabled people data on 346 British local authorities between 2009 and 2014. When the number of sanctioned disabled claimants rises (as a proportion of all claimants), the disability rate among economically inactive people becomes larger. There is no clear relationship between sanctioning disabled claimants and the employed disability rate.