IDEAS home Printed from https://ideas.repec.org/a/bla/ijethy/v18y2022i3p310-338.html
   My bibliography  Save this article

Stigma model of welfare fraud and non‐take‐up: Theory and evidence from OECD panel data

Author

Listed:
  • Kenichi Kurita
  • Nobuaki Hori
  • Yuya Katafuchi

Abstract

This paper attempts to challenge two puzzles in the welfare program. The first puzzle is “non‐take‐up welfare,” which occurs when needy people do not take up welfare. Second, in some countries, the benefit level is high, but the recipient ratio is low; while the other nations have lower benefit levels but higher recipient ratios. We present a model of welfare stigma in which both non‐take‐up and welfare fraud exist within the equilibrium. This shows the possibility for the recipient ratio to decrease as the benefit level increases in the comparative statics. Our empirical results are consistent with our theoretical results.

Suggested Citation

  • Kenichi Kurita & Nobuaki Hori & Yuya Katafuchi, 2022. "Stigma model of welfare fraud and non‐take‐up: Theory and evidence from OECD panel data," International Journal of Economic Theory, The International Society for Economic Theory, vol. 18(3), pages 310-338, September.
    • Handle: RePEc:bla:ijethy:v:18:y:2022:i:3:p:310-338
    DOI: 10.1111/ijet.12295
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/ijet.12295
    Download Restriction: no
    File URL: https://libkey.io/10.1111/ijet.12295?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Markus Brueckner & Hannes Schwandt, 2015. "Income and Population Growth," Economic Journal, Royal Economic Society, vol. 125(589), pages 1653-1676, December.
    2. Emmanuel Saez, 2002. "Optimal Income Transfer Programs: Intensive versus Extensive Labor Supply Responses," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 1039-1073.
    3. Tomer Blumkin & Yoram Margalioth & Efraim Sadka, 2015. "Welfare Stigma Re-Examined," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(6), pages 874-886, December.
    4. Yuzo Honda, 1985. "Testing the Error Components Model with Non-Normal Disturbances," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(4), pages 681-690.
    5. Besley, Timothy & Coate, Stephen, 1992. "Understanding welfare stigma: Taxpayer resentment and statistical discrimination," Journal of Public Economics, Elsevier, vol. 48(2), pages 165-183, July.
    6. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    7. Baltagi, Badi H, 1984. "A Monte Carlo Study for Pooling Time Series of Cross-Section Data in the Simultaneous Equations Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(3), pages 603-624, October.
    8. Regina T. Riphahn, 2001. "Rational Poverty or Poor Rationality? The Take‐up of Social Assistance Benefits," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(3), pages 379-398, September.
    9. George A. Akerlof & Rachel E. Kranton, 2000. "Economics and Identity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 715-753.
    10. Hupkau, Claudia & Maniquet, François, 2018. "Identity, non-take-up and welfare conditionality," Journal of Economic Behavior & Organization, Elsevier, vol. 147(C), pages 13-27.
    11. Arellano, M, 1987. "Computing Robust Standard Errors for Within-Groups Estimators," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(4), pages 431-434, November.
    12. Duclos, Jean-Yves, 1995. "Modelling the take-up of state support," Journal of Public Economics, Elsevier, vol. 58(3), pages 391-415, November.
    13. Jun-ichi Itaya & Kenichi Kurita, 2020. "Replicator Evolution of Welfare Stigma: Welfare Fraud vs. Incomplete Take-Up," CESifo Working Paper Series 8621, CESifo.
    14. Immervoll, Herwig, 2009. "Minimum-Income Benefits in OECD Countries: Policy Design, Effectiveness and Challenges," IZA Discussion Papers 4627, Institute of Labor Economics (IZA).
    15. Rachel E. Kranton, 2016. "Identity Economics 2016: Where Do Social Distinctions and Norms Come From?," American Economic Review, American Economic Association, vol. 106(5), pages 405-409, May.
    16. Kim, Youngse, 2003. "Income distribution and equilibrium multiplicity in a stigma-based model of tax evasion," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1591-1616, August.
    17. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-1035, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yuya Katafuchi & Kenichi Kurita & Shunsuke Managi, 2021. "COVID-19 with Stigma: Theory and Evidence from Mobility Data," Economics of Disasters and Climate Change, Springer, vol. 5(1), pages 71-95, April.
    2. Kurita, Kenichi, 2021. "Comparative institutional analysis of poverty-alleviation systems: Does basic income improve social welfare?," MPRA Paper 107177, University Library of Munich, Germany.
    3. Kino, Shiho & Nishioka, Daisuke & Ueno, Keiko & Saito, Masashige & Kondo, Naoki, 2022. "Changes in social relationships by the initiation and termination of public assistance in the older Japanese population: A JAGES panel study," Social Science & Medicine, Elsevier, vol. 293(C).
    4. Kenichi Kurita & Shunsuke Managi, 2022. "COVID-19 and Stigma: Evolution of Self-restraint Behavior," Dynamic Games and Applications, Springer, vol. 12(1), pages 168-182, March.
    5. Hamamura, Jumpei & Kurita, Kenichi, 2021. "Does stigma against tax avoidance improve social welfare?," MPRA Paper 107173, University Library of Munich, Germany.
    6. Katafuchi, Yuya & Kurita, Kenichi & Managi, Shunsuke, 2020. "Self-restraint behavior under COVID-19 through stigma: Theory and evidence based on mobility data," MPRA Paper 102182, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kurita, Kenichi & Hori, Nobuaki & Katafuchi, Yuya, 2019. "Model of endogenous welfare stigma: Statistical discrimination view," MPRA Paper 98299, University Library of Munich, Germany.
    2. Hetschko, Clemens & Schöb, Ronnie & Wolf, Tobias, 2020. "Income support, employment transitions and well-being," Labour Economics, Elsevier, vol. 66(C).
    3. Yuya Katafuchi & Kenichi Kurita & Shunsuke Managi, 2021. "COVID-19 with Stigma: Theory and Evidence from Mobility Data," Economics of Disasters and Climate Change, Springer, vol. 5(1), pages 71-95, April.
    4. Katafuchi, Yuya & Kurita, Kenichi & Managi, Shunsuke, 2020. "Self-restraint behavior under COVID-19 through stigma: Theory and evidence based on mobility data," MPRA Paper 102182, University Library of Munich, Germany.
    5. Terracol, Antoine, 2009. "Guaranteed minimum income and unemployment duration in France," Labour Economics, Elsevier, vol. 16(2), pages 171-182, April.
    6. Jun-ichi Itaya & Kenichi Kurita, 2020. "Replicator Evolution of Welfare Stigma: Welfare Fraud vs. Incomplete Take-Up," CESifo Working Paper Series 8621, CESifo.
    7. Kenichi Kurita & Shunsuke Managi, 2022. "COVID-19 and Stigma: Evolution of Self-restraint Behavior," Dynamic Games and Applications, Springer, vol. 12(1), pages 168-182, March.
    8. Sylvain Chareyron, 2016. "Le non-recours aux aides sociales sous conditions de ressources," Erudite Ph.D Dissertations, Erudite, number ph16-01 edited by Yannick L'Horty & François Legendre, December.
    9. Hamamura, Jumpei & Kurita, Kenichi, 2021. "Does stigma against tax avoidance improve social welfare?," MPRA Paper 107173, University Library of Munich, Germany.
    10. Germain, Antoine, 2023. "Basic income versus fairness: redistribution with inactive agents," LIDAM Discussion Papers CORE 2023022, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    11. Friedrichsen, Jana & König, Tobias & Schmacker, Renke, 2018. "Social image concerns and welfare take-up," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 168, pages 174-192.
    12. Bargain, Olivier & Immervoll, Herwig & Viitamäki, Heikki, 2007. "How Tight Are Safety-Nets in Nordic Countries? Evidence from Finnish Register Data," IZA Discussion Papers 3004, Institute of Labor Economics (IZA).
    13. Wolf, Tobias & Hetschko, Clemens & Schöb, Ronnie, 2016. "Income Support, (Un-)Employment and Well-Being," VfS Annual Conference 2016 (Augsburg): Demographic Change 145860, Verein für Socialpolitik / German Economic Association.
    14. Sylvain Chareyron & Patrick Domingues, 2018. "Take‐Up of Social Assistance Benefits: The Case of the French Homeless," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(1), pages 170-191, March.
    15. Laurence Jacquet, 2014. "Tagging and redistributive taxation with imperfect disability monitoring," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 42(2), pages 403-435, February.
    16. Oh, Ilfan, 2019. "Autonomy of profit rate distribution and its dynamics from firm size measures: A statistical equilibrium approach," BERG Working Paper Series 146, Bamberg University, Bamberg Economic Research Group.
    17. Edwin Fourrier-Nicolai, 2020. "How Family Transfers Crowd-out Social Assistance in Germany," AMSE Working Papers 2023, Aix-Marseille School of Economics, France.
    18. Rozema, Kyle & Ziebarth, Nicolas R., 2015. "Behavioral Responses to Taxation: Cigarette Taxes and Food Stamp Take-Up," IZA Discussion Papers 8907, Institute of Labor Economics (IZA).
    19. Croissant, Yves & Millo, Giovanni, 2008. "Panel Data Econometrics in R: The plm Package," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 27(i02).
    20. Marina Albanese, 2020. "Social and Relational Variables in Worker Cooperatives: Implications for the Objective Function," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 9(1), pages 26-44.

    More about this item

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ijethy:v:18:y:2022:i:3:p:310-338. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1742-7355 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.