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How Tight Are Safety-Nets in Nordic Countries? Evidence from Finnish Register Data

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Author Info

  • Bargain, Olivier

    ()
    (University of Aix-Marseille II)

  • Immervoll, Herwig

    ()
    (OECD, Paris)

  • Viitamäki, Heikki

    ()
    (VATT, Helsinki)

Abstract

The non take-up of social assistance benefits due to claim costs may seriously limit the anti-poverty effect of these programs. Yet, available evidence is fragmented and mostly relies on interview-based data, potentially biased by misreporting and measurement errors on both benefit entitlement and income levels used to assess eligibility. In this paper, we use Finnish administrative data to compare eligibility and actual receipt of social assistance by working-age families during the post-recession period (1996-2003). Possible errors due to time-period issues and discretionary measures by local agencies are carefully investigated. Non take-up is found to be substantial – between 40% and 50% – and increasing during the period. Using repeated cross-section estimations, we identify a set of stable determinants of claiming behavior and suggest that the increasing trend is mainly due to a composition effect, i.e. a decline in the proportion of groups with higher claiming propensity. We finally discuss the targeting efficiency of the social assistance scheme.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3004.

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Length: 26 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:iza:izadps:dp3004

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Keywords: social assistance; take-up; poverty; register data;

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References

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  1. Stephen Pudney & Ruth Hancock & Holly Sutherland, 2006. "Simulating the Reform of Means-tested Benefits with Endogenous Take-up and Claim Costs," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(2), pages 135-166, 04.
  2. Brewer, Mike & Duncan, Alan & Shephard, Andrew & Suarez, Maria Jose, 2006. "Did working families' tax credit work? The impact of in-work support on labour supply in Great Britain," Labour Economics, Elsevier, vol. 13(6), pages 699-720, December.
  3. Stephen Pudney & Monica Hernandez & Ruth Hancock, 2007. "The welfare cost of means-testing: pensioner participation in income support," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(3), pages 581-598.
  4. Ruth Hancock & Stephen Pudney & Geraldine Barker & Monica Hernandez & Holly Sutherland, 2004. "The Take-Up of Multiple Means-Tested Benefits by British Pensioners: Evidence from the Family Resources Survey," Fiscal Studies, Institute for Fiscal Studies, vol. 25(3), pages 279-303, September.
  5. 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.
  6. Rebecca M. Blank, 2000. "What Causes Public Assistance Caseloads to Grow?," JCPR Working Papers 18, Northwestern University/University of Chicago Joint Center for Poverty Research.
  7. Olivier Bargain & Kristian Orsini, 2004. "In-work policies in Europe: killing two birds with one stone?," DELTA Working Papers 2004-13, DELTA (Ecole normale supérieure).
  8. Duclos, Jean-Yves, 1995. "Modelling the take-up of state support," Journal of Public Economics, Elsevier, vol. 58(3), pages 391-415, November.
  9. Janet Currie, 2004. "The Take Up of Social Benefits," NBER Working Papers 10488, National Bureau of Economic Research, Inc.
  10. Hoynes, Hilary Williamson, 1996. "Welfare Transfers in Two-Parent Families: Labor Supply and Welfare Participation under AFDC-UP," Econometrica, Econometric Society, vol. 64(2), pages 295-332, March.
  11. Riphahn, Regina T., 2000. "Rational Poverty or Poor Rationality? The Take-up of Social Assistance Benefits," IZA Discussion Papers 124, Institute for the Study of Labor (IZA).
  12. Monica Hernandez & Stephen Pudney & Ruth Hancock, 2006. "The Welfare Cost of Means Testing: Pensioner Participation in Income," Working Papers 2006004, The University of Sheffield, Department of Economics, revised Apr 2006.
  13. Andren, Thomas, 2003. "The choice of paid childcare, welfare, and labor supply of single mothers," Labour Economics, Elsevier, vol. 10(2), pages 133-147, April.
  14. Dahlia K. Remler & Jason E. Rachlin & Sherry A. Glied, 2001. "What can the take-up of other programs teach us about how to improve take-up of health insurance programs?," NBER Working Papers 8185, National Bureau of Economic Research, Inc.
  15. Rebecca M. Blank & Patricia Ruggles, 1996. "When Do Women Use Aid to Families with Dependent Children and Food Stamps? The Dynamics of Eligibility Versus Participation," Journal of Human Resources, University of Wisconsin Press, vol. 31(1), pages 57-89.
  16. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December.
  17. Kathleen McGarry, 1996. "Factors Determining Participation of the Elderly in Supplemental Security Income," Journal of Human Resources, University of Wisconsin Press, vol. 31(2), pages 331-358.
  18. repec:ese:emodwp:em1-03 is not listed on IDEAS
  19. Glen Bramley & Sharon Lancaster & David Gordon, 2000. "Benefit Take-up and the Geography of Poverty in Scotland," Regional Studies, Taylor & Francis Journals, vol. 34(6), pages 507-519.
  20. Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "The labour market impact of the working families’ tax credit," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 75-103, March.
  21. Virginia Hernanz & Franck Malherbet & Michele Pellizzari, 2004. "Take-Up of Welfare Benefits in OECD Countries: A Review of the Evidence," OECD Social, Employment and Migration Working Papers 17, OECD Publishing.
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Citations

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Cited by:
  1. Teemu Lyytikäinen, 2008. "Studies on the Effects of Property Taxation, Rent Control and Housing Allowances," Research Reports 140, Government Institute for Economic Research Finland (VATT).
  2. Matti Sarvimäki, 2008. "Assimilation to a Welfare State: Labor Market Performance and Use of Social Benefits by Immigrants to Finland," Discussion Papers 454, Government Institute for Economic Research Finland (VATT).

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