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

  • Riphahn, Regina T.


    (University of Erlangen-Nuremberg)

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

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Length: 40 pages
Date of creation: Mar 2000
Date of revision:
Publication status: published in: Review of Income and Wealth, 2001, 47(3), 379-398
Handle: RePEc:iza:izadps:dp124
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  1. 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.
  2. repec:oup:qjecon:v:106:y:1991:i:4:p:1157-89 is not listed on IDEAS
  3. Rebecca M. Blank & David E. Card, 1991. "Recent Trends in Insured and Uninsured Unemployment: Is There an Explanation?," The Quarterly Journal of Economics, Oxford University Press, vol. 106(4), pages 1157-1189.
  4. Patricia M. Anderson & Bruce D. Meyer, 1997. "Unemployment Insurance Takeup Rates and the After-Tax Value of Benefits," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 913-937.
  5. 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.
  6. repec:oup:qjecon:v:112:y:1997:i:3:p:913-37 is not listed on IDEAS
  7. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December.
  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. Marlene Kim & Thanos Mergoupis, 1998. "The Working Poor and Welfare Recipiency," Macroeconomics 9810006, EconWPA.
  10. 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.
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