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The Dynamics of Welfare Fraud: An Econometric Duration Model in Discrete Time

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  • Douglas Wolf
  • David Greenberg
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    Abstract

    An important source of errors in transfer payments programs is the fraudulent misreporting of earnings received by recipients. We propose a model of the recipient's decision to report income and the expected penalties if caught engaging in fraud. We discuss several features of the detection and penalty structures in the AFDC and Food Stamps programs and present estimates of a model of the duration of fraudulent earnings-misreporting episodes. We find that recipients respond to increases in the returns to fraud by lengthening their episodes of misreporting. However, the level of fraudulent activity at any given time is rather low.

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    Bibliographic Info

    Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

    Volume (Year): 21 (1986)
    Issue (Month): 4 ()
    Pages: 437-455

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    Handle: RePEc:uwp:jhriss:v:21:y:1986:i:4:p:437-455

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    Web page: http://jhr.uwpress.org/

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    Cited by:
    1. Orley Ashenfelter & David Ashmore & Olivier Deschenes, 1998. "Do Unemployment Insurance Recipients Actively Seek Work? Randomized Trials in Four U.S. States," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 791, Princeton University, Department of Economics, Industrial Relations Section..
    2. Martin Halla & Friedrich G. Schneider, 2005. "Taxes and Benefits: Two Distinct Options to Cheat on the State?," Economics working papers, Department of Economics, Johannes Kepler University Linz, Austria 2005-05, Department of Economics, Johannes Kepler University Linz, Austria.
    3. Martin Halla & Mario Lackner & Friedrich G. Schneider, 2009. "An Empirical Analysis of the Dynamics of the Welfare State: The Case of Benefit Morale," NRN working papers, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria 2009-04, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
    4. David Card & Brian P. McCall, 1994. "Is Workers' Compensation Covering Uninsured Medical Costs? Evidence from the 'Monday Effect'," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 706, Princeton University, Department of Economics, Industrial Relations Section..
    5. repec:fth:prinin:412 is not listed on IDEAS
    6. Ashenfelter, Orley & Ashmore, David & Deschenes, Olivier, 2005. "Do unemployment insurance recipients actively seek work? Evidence from randomized trials in four U.S. States," Journal of Econometrics, Elsevier, Elsevier, vol. 125(1-2), pages 53-75.

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