Earning more but less secure: Unpaid carers, paid work, and a cliff edge in the design of a cash allowance

Unpaid carers often experience economic insecurity despite having paid work. When available, benefit programs might have perverse effects depending on their design. Here I ask how large, for how long, among whom, and why, by analysing the UK’s Carer’s Allowance, a non-means-tested benefit with a sharp earnings limit. Based on 15 waves of Understanding Society (2009–2024), I examine economic insecurity by combining material indicators (arrears, income losses, savings) as well as perceptions (financial worry, satisfaction with incomes). Carers with a history of Carer’s Allowance receipt are compared to those without as their earnings progress in an event-study design. Insecurity declines as earnings increase, but not homogeneously among carers. Past the earnings limit, carers with a history of Carer’s Allowance receipt report relatively more arrears with bills and housing, less regular savings, heightened financial worries, and more dissatisfaction with income. The relative gap in insecurity is large, persistent over time, and extends to the whole household. The spike in arrears is more pronounced among renters, and middle- and working-class carers experience relatively more worries and dissatisfaction. These patterns appear unrelated to variation in caregiving involvement. Rather, differences in incomes, employment, and benefit receipt widen past the limit. By foregrounding the role of policy design, findings speak to studies on social risks and economic insecurity, broadening the case for reforms aimed at carers mixing paid and unpaid work.