Population dynamics of welfare stigma: welfare fraud versus incomplete take-up

Jun-ichi Itaya () and Kenichi Kurita ()
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Kenichi Kurita: Urban Institute and Faculty of Social and Cultural Studies, Kyushu University

Journal of Population Economics, 2024, vol. 37, issue 1, No 26, 28 pages

Abstract: Abstract This study investigates the conditions under which welfare fraud and incomplete take-up emerge simultaneously and persist for a long time, which has been observed in many countries, particularly Japan and Germany. To do this, we extend models of statistical discrimination and taxpayers’ resentment to simple models of population dynamics. We find two stable boundary equilibria in the first model. One of these equilibria entails low welfare fraud and $$100\%$$ 100 % incomplete take-up, and the other entails high welfare fraud and $$100\%$$ 100 % take-up. In contrast, we find a unique stable equilibrium in the tax resentment model, which is interior and thus allows for the coexistence of welfare fraud and incomplete take-up in a long run. Hence, we conclude that this unique long-run equilibrium of the dynamic taxpayers’ resentment model provides a better explanation for the observation of simultaneous and persistent presence of welfare fraud and incomplete take-up in actual economies.

Keywords: Stigma; Population game; Incomplete take-up; Welfare fraud; Non-take-up (search for similar items in EconPapers)
JEL-codes: H31 H53 I38 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s00148-024-01009-8

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