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Why Many Eligible Individuals Choose Not to Go on Welfare

Pak Wai Liu, Jie Zhang () and Junsen Zhang

Economic Inquiry, 2005, vol. 43, issue 2, 385-400

Abstract: This article investigates why many eligible for welfare do not participate. We show that on-the-job wage-rising potential is the key factor motivating nonparticipation. Although individuals with very low earnings and little wage-rising potential are typically welfare recipients, those with good wage-rising potential may choose to work, participate in old age, or never participate. Nonparticipation remains the best choice for eligible individuals with large wage-rising potential even if universal old-age social security is available. We will also apply this model to a comprehensive welfare system in Hong Kong.(JEL H53, I38, J31) Copyright 2005, Oxford University Press.

JEL-codes: H53 I38 J31 (search for similar items in EconPapers)
Date: 2005
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Handle: RePEc:oup:ecinqu:v:43:y:2005:i:2:p:385-400