Rational poverty or poor rationality?: the take-up of social assistance benefits
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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20 percent actual household Anderson and Meyer application cost applied benefit amount benefit duration benefit take-up Blundell Brunello C. M. Schmidt children under 16 confirm degree of poverty Descriptive Statistics economic eligible households Ethnic German Evaluation EVS data EVS Income Expenditure Survey financial wealth foreign households German social assistance German studies Hauser and Semrau hidden poor households hidden poverty home ownership household characteristics Household head household net income human capital hypotheses Immigrant Income and Expenditure income support benefits increase individuals Klanberg labor economics Labor Market Married couple Moffitt Neumann and Hertz participation decision Poverty degree poverty gap poverty rate quartile of poverty R. T. Riphahn sample sensitivity tests single parent households social assistance administration social assistance benefits social assistance program special circumstances standard rate benefits stigma effects supplementary benefits support in special take up benefits take-up behavior take-up rates transfer programs Unemployment University of Munich variable Wage Yaniv