Transfer Program Complexity and the Take-Up of Social Benefits

Henrik Jacobsen Kleven and Wojciech Kopczuk

American Economic Journal: Economic Policy, 2011, vol. 3, issue 1, 54-90

Abstract: We model complexity in social programs as a by-product of the screening process. While a more rigorous screening process may improve targeting efficiency, the associated complexity is costly to applicants and induces incomplete take-up. We integrate the study of take-up with the study of rejection (Type I) and award (Type II) errors, and characterize optimal programs when policy makers choose screening intensity (and complexity), an eligibility rule, and a benefit level. Consistent with many real-world programs, optimal programs feature high complexity, incomplete take-up, classification errors of both Type I and II and, in some cases, "excessive" benefits. (JEL D04, D82, H23, I18, I38)

JEL-codes: D04 D82 H23 I18 I38 (search for similar items in EconPapers)
Date: 2011
Note: DOI: 10.1257/pol.3.1.54
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Citations: View citations in EconPapers (112)

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Working Paper: Transfer Program Complexity and the Take Up of Social Benefits (2008)
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