Brad DeLong chose the US chart above to demonstrate that the number of people who are paid under the US disability insurance scheme doesn’t vary that much when the unemployment rate goes up and down. Ours doesn’t either. That’s the point of the second Australian chart here. It compares the proportion of the population aged 15+ who receive Disability Support Pension with the share of the population that is unemployed, by the ABS measure. As in the US, the number of people who apply for DSP may well rise and fall with unemployment, but the number who receive it doesn’t seem to, at least not that much.
In the first Australian chart, above, I’ve replicated the first part of DeLong’s chart, although I only have data back to 1989. It compares the DSP recipient rate with the rate that we would have had if the demographic structure of the Australian population had remained unchanged from 1989. I’ve used both age and gender in my decomposition. This is telling you that part of the rise in our DSP recipient rate is due to changes in the composition of the population, but a little less than is the case in the US.
I’d be a bit hesitant to compare the level of these series across countries, because of differences in the definition and methodology of the job vacancies surveys, but the differences in the rate and direction of change are pretty striking. The number of Americans per vacancy soared in the financial crisis (that’s what that unhelpfully-labelled FRED chart is showing), while our only rose a little bit. We’re not quite sure exactly how much, because the ABS didn’t conduct the vacancies survey for a few vital quarters there in 2008/09 (budget cuts). But most estimates suggest it rose a little, then fell to nearly its pre-crisis low. Worryingly, it has started to rise again, and this ratio is now at its highest level in a decade.
This second instalment is only brief, because the DSP charts took a long time to put together and I’m about to go on holiday. I’ll continue this in the new year!