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Explaining Benefit Take-up Behavior – The Role of Financial Incentives

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  • Olof Rosenqvist
  • Håkan Selin

Abstract

Take-up of social benefits is a central issue in poverty alleviation and fiscal evaluations of policy reforms. However, it is difficult to find exogenous variation in the benefit level, and little is therefore known about take-up responses to basic financial incentives. We exploit large and plausibly random variation in levels of ”flat-rate parental leave benefits”, which all Swedish parents are entitled to. There are no financial reasons to leave money on the table, but take-up is nevertheless imperfect. Higher benefits substantially increase claiming across the income distribution. We further detect sizable spillover effects on subsequent take-up of low-income earners.

Suggested Citation

  • Olof Rosenqvist & Håkan Selin, 2024. "Explaining Benefit Take-up Behavior – The Role of Financial Incentives," CESifo Working Paper Series 11402, CESifo.
    • Handle: RePEc:ces:ceswps:_11402
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    More about this item

    Keywords

    parental benefits; incomplete take-up; after-tax benefits;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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