The Impact of the UK Universal Credit Rollout: Labor Market Outcomes under the Welfare Reform
Abstract
Universal Credit (UC) is one of the most significant welfare reforms in the UK in recent decades. This paper exploits the staggered 2015–2018 rollout of UC across local authorities using panel data from Understanding Society. I find no effect on employment but a statistically significant increase in hours worked among the employed, with effects strengthening over time. Benefit income declines at longer horizons, consistent with UC’s design. These results indicate that UC primarily affects labor supply along the intensive margin. Effects are larger among groups with more direct exposure, suggesting that rollout-period estimates understate treatment effects for actual recipients.