Empirical Economics

, Volume 39, Issue 3, pp 847-875

The take-up of means-tested income support

  • Stephen WhelanAffiliated withDiscipline of Economics, University of Sydney Email author 

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Many studies have identified that eligible claimants do not participate in means-tested income support programs. We examine the determinants of the decision to take-up social assistance in Canada using the 1997 Canadian Out of Employment Panel dataset. Using a conditional maximum likelihood approach to take account of the potential endogeneity of the level of benefits available to potential claimants, we find that benefit levels and recent receipt of Social Assistance (SA) are important determinants of the take-up decision. The results are important for the fiscal implications of changing benefit levels as the take-up rate is systematically related to the benefits potential recipients are entitled to receive. Further, it suggests that stigma and transaction costs associated with program use are important in explaining the take-up decision.


Means-tested Welfare Take-up