Simulating the Reform of Means‐tested Benefits with Endogenous Take‐up and Claim Costs*

Stephen Pudney, Ruth Hancock and Holly Sutherland

Oxford Bulletin of Economics and Statistics, 2006, vol. 68, issue 2, 135-166

Abstract: Microsimulation models are commonly used to examine the distributional impact of reforms of the means‐tested benefit system. Take‐up behaviour is related to the level of entitlement, so reform may induce changes in take‐up. We develop a stochastic simulation method and apply it to a probit model of ‘income support’ take‐up by the UK pensioners. The method allows us to adjust net income for the welfare losses because of tangible or intangible claim costs. Endogenous take‐up and claim costs both have an important impact on the simulated outcomes of the policy reform.

Date: 2006
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Citations: View citations in EconPapers (28)

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https://doi.org/10.1111/j.1468-0084.2006.00156.x

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Working Paper: Simulating the reform of means-tested benefits with endogenous take-up and claim costs (2004)
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