Empirical Economics

, Volume 39, Issue 3, pp 847–875

The take-up of means-tested income support

Article

Abstract

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.

Keywords

Means-tested Welfare Take-up 

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Copyright information

© Springer-Verlag 2009

Authors and Affiliations

  1. 1.Discipline of EconomicsUniversity of SydneySydneyAustralia

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