Non-take-up of in-work benefits: determinants, benefit erosion and indexing

Diego Muñoz-Higueras (), Stephan Köppe, Rafael Granell and Amadeo Fuenmayor
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Diego Muñoz-Higueras: University of Valencia
Stephan Köppe: University College Dublin
Rafael Granell: University of Valencia
Amadeo Fuenmayor: University of Valencia

Journal for Labour Market Research, 2024, vol. 58, issue 1, 1-19

Abstract: Abstract Non-take-up of welfare schemes is a key concern of policy effectiveness. Building on studies that have shown the low take-up of minimum income schemes, our case study of Ireland’s Working Family Payment is the first to analyse non-take-up of an in-work benefit and its determinants with a special focus on labour market factors. Based on EU-SILC (2014–2019) we estimate a non-take-up rate between 63 and 76%, which poses a major obstacle for effective poverty prevention. Moreover, we stress that non-take-up of in-work benefits differs to minimum income schemes. We provide new evidence on how labour market characteristics play an important role in explaining non-take-up, especially self-employment and the interaction with unemployment benefits. Benefit erosion is a key factor in declining eligibility, which should be addressed by indexing wages and prices. Furthermore, we propose policy reforms around automatic enrolment or tax credits to mitigate non-take-up and alleviate in-work poverty.

Keywords: Non-take-up; Administrative design; In-work benefits; In-work poverty; Labour market characteristics; Working family payment (search for similar items in EconPapers)
JEL-codes: C15 D04 H31 H53 I38 J38 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1186/s12651-024-00385-8

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