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Transfer Program Complexity and the Take-Up of Social Benefits

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  • Henrik Jacobsen Kleven
  • Wojciech Kopczuk

Abstract

We model complexity in social programs as a by-product of the screening process. While a more rigorous screening process may improve targeting efficiency, the associated complexity is costly to applicants and induces incomplete take-up. We integrate the study of take-up with the study of rejection (Type I) and award (Type II) errors, and characterize optimal programs when policy makers choose screening intensity (and complexity), an eligibility rule, and a benefit level. Consistent with many real-world programs, optimal programs feature high complexity, incomplete take-up, classification errors of both Type I and II and, in some cases, "excessive" benefits. (JEL D04, D82, H23, I18, I38)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/pol.3.1.54
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

Volume (Year): 3 (2011)
Issue (Month): 1 (February)
Pages: 54-90

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Handle: RePEc:aea:aejpol:v:3:y:2011:i:1:p:54-90

Note: DOI: 10.1257/pol.3.1.54
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References

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Citations

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Cited by:
  1. Laurence jacquet, 2013. "Tagging and Redistributive Taxation with Imperfect Disability Monitoring," THEMA Working Papers 2013-01, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  2. Marieke Huysentruyt & Eva Lefevere, 2010. "Child Benefit Support and Method of Payment: Evidence from a Randomized Experiment in Belgium," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 163-84, May.
  3. Bargain, Olivier & Immervoll, Herwig & Viitamäki, Heikki, 2010. "No Claim, No Pain: Measuring the Non-Take-up of Social Assistance Using Register Data," IZA Discussion Papers 5355, Institute for the Study of Labor (IZA).
  4. Laurence Jacquet, 2010. "Take it or Leave it: Take-up, Optimal Transfer Programs, and Monitoring," CESifo Working Paper Series 3018, CESifo Group Munich.
  5. Liu, Hong & Sun, Qi & Zhao, Zhong, 2013. "Social Learning and Health Insurance Enrollment: Evidence from China's New Cooperative Medical Scheme," IZA Discussion Papers 7251, Institute for the Study of Labor (IZA).
  6. Tomer Blumkin & Yoram Margalioth & Efraim Sadka, 2008. "The Role of Stigma in the Design of Welfare Programs," CESifo Working Paper Series 2305, CESifo Group Munich.
  7. Johannes Abeler & Simon Jäger, 2013. "Complex Tax Incentives - An Experimental Investigation," CESifo Working Paper Series 4231, CESifo Group Munich.
  8. Tomer Blumkin & Efraim Sadka & Yoram Margalioth, 2008. "The Role of Stigma in the Design of Welfare Programs," Working Papers 0806, Ben-Gurion University of the Negev, Department of Economics.
  9. Christian Gillitzer & Peer Ebbesen Skov, 2013. "Evidence on Unclaimed Charitable Contributions from the Introduction of Third-Party Information Reporting in Denmark," EPRU Working Paper Series 2013-04, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  10. Laurence Jacquet, 2014. "Tagging and redistributive taxation with imperfect disability monitoring," Social Choice and Welfare, Springer, vol. 42(2), pages 403-435, February.

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