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Rational Poverty or Poor Rationality? The Take-up of Social Assistance Benefits

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Author Info
Riphahn, Regina T. () (University of Munich, CEPR, London and IZA, Bonn, Germany)

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Abstract

In several countries social assistance dependence has been increasing since the 1980s. After surveying the theoretical and empirical take-up literature, this study presents estimates of recent rates of non take-up of social assistance benefits. Once methodological shortcomings of prior estimations are corrected, the results show that take-up has fallen recently and thus cannot explain the rising welfare receipt. Following theoretical predictions, the probability that a rational individual takes up social assistance increases with the expected benefit amount and duration, and falls with application cost and stigma. More than half of all households eligible for transfers under the German social assistance program did not claim their benefits.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 124.

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Length: 39 pages
Date of creation: Mar 2000
Date of revision:
Publication status: published in: The Review of Income and Wealth, 47 (3), September 2001, 379-398
Handle: RePEc:iza:izadps:dp124

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Related research
Keywords: Take-up; transfer program; social assistance; welfare;

Other versions of this item:

Find related papers by JEL classification:
I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Anderson, Patricia M & Meyer, Bruce D, 1997. "Unemployment Insurance Takeup Rates and the After-Tax Value of Benefits," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 913-37, August.
  2. McCall, Brian P, 1995. "The Impact of Unemployment Insurance Benefit Levels on Recipiency," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 189-98, April.
  3. Blank, Rebecca M & Card, David E, 1991. "Recent Trends in Insured and Uninsured Unemployment: Is There an Explanation?," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1157-89, November. [Downloadable!] (restricted)
    Other versions:
  4. Duclos, Jean-Yves, 1995. "Modelling the take-up of state support," Journal of Public Economics, Elsevier, vol. 58(3), pages 391-415, November. [Downloadable!] (restricted)
  5. Blundell, Richard & Fry, Vanessa & Walker, Ian, 1987. "Modelling the Take-up of Means-tested Benefits: the Case of Housing Benefits in the United Kingdom," Economic Journal, Royal Economic Society, vol. 98(390), pages 58-74, Supplemen. [Downloadable!] (restricted)
  6. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Herwig Immervoll & Cathal O'Donoghue, 2003. "Welfare Benefits and Work Incentives. An Analysis of the Distribution of Net Replacement Rates in Europe using EUROMOD, a Multi- Country Microsimulation Model," Labor and Demography 0302001, EconWPA. [Downloadable!]
  2. Heshmati, Almas, 2004. "Continental and Sub-Continental Income Inequality," IZA Discussion Papers 1271, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. Fuchs M, 2007. "Social Assistance No, Thanks? Empirical Analysis Of Non Take Up In Austria 2003," EUROMOD Working Papers EM4/07, EUROMOD at the Institute for Social and Economic Research. [Downloadable!]
  4. Kai-Uwe Müller & Viktor Steiner, 2008. "Would a Legal Minimum Wage Reduce Poverty?: A Microsimulation Study for Germany," Discussion Papers of DIW Berlin 791, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  5. Blank, Rebecca M., 2002. "U.S. Welfare Reform: What's Relevant for Europe?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  6. Hilke Almut Kayser & Joachim R. Frick, 2000. "Take It or Leave It: (Non-) Take-up Behavior of Social Assistance in Germany," Discussion Papers of DIW Berlin 210, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  7. James J. Heckman & Jeffrey Smith, 2003. "The Determinants of Participation in a Social Program: Evidence from a Prototypical Job Training Program," University of Western Ontario, CIBC Human Capital and Productivity Project Working Papers 20034, University of Western Ontario, CIBC Human Capital and Productivity Project. [Downloadable!]
    Other versions:
  8. Olivier Bargain & Herwig Immervoll & Heikki Viitamäki, 2007. "How Tight are Safety-Nets in Nordic Countries? Evidence from Finnish Register Data," Working Papers 200712, School Of Economics, University College Dublin. [Downloadable!]
    Other versions:
  9. repec:ese:iserwp: is not listed on IDEAS
  10. Immervoll H & O'donoghue C, 2002. "Welfare Benefits And Work Incentives: The Distribution Of Net Replacement Rates In Europe Using A Cross Country Microsimulation Model, Euromod," EUROMOD Working Papers EM4/01, EUROMOD at the Institute for Social and Economic Research. [Downloadable!]
  11. Pio Baake & Vanessa von Schlippenbach, 2008. "Upfront Payments and Listing Decisions," Discussion Papers of DIW Berlin 793, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  12. Laura Chadwick & Jürgen Volkert, 2003. "Making Work Pay: U.S. American models for a German context?," IAW Discussion Papers 08, Institut für Angewandte Wirtschaftsforschung (IAW). [Downloadable!]
  13. Müller, Kai-Uwe & Steiner, Viktor, 2008. "Would a Legal Minimum Wage Reduce Poverty? A Microsimulation Study for Germany," IZA Discussion Papers 3491, Institute for the Study of Labor (IZA). [Downloadable!]
  14. César Martinelli & Susan W. Parker, 2006. "Deception and Misreporting in a Social Program," Levine's Bibliography 321307000000000120, UCLA Department of Economics. [Downloadable!]
    Other versions:
  15. Joachim R. Frick & Olaf Groh-Samberg, 2007. "To Claim or Not to Claim: Estimating Non-take-up of Social Assistance in Germany and the Role of Measurement Error," SOEPpapers 53, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
    Other versions:
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