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The antipoverty performance of universal and means-tested benefits with costly take-up

Alari Paulus

No 16/12, ImPRovE Working Papers from Herman Deleeck Centre for Social Policy, University of Antwerp

Abstract: We assess the optimal design of transfers in the context of poverty alleviation and welfarist objectives. We extend the analytical framework of Creedy (1997) with costly benefit take-up - a common characteristics of means-tested schemes in par-ticular - to study how this affects the take-up of benefits and the optimal choice between means-tested and universal benefits. Numeric simulations reveal that take-up costs can increase social welfare and reduce poverty rates achieved with means-tested schemes by inducing people to increase their work effort. Universal benefits generally still outperform means-tested schemes on the basis of social welfare and poverty measures when these are adjusted for take-up costs.

Keywords: optimal transfers; means-testing; take-up; poverty (search for similar items in EconPapers)
JEL-codes: H21 H24 H31 I38 (search for similar items in EconPapers)
Date: 2016-04
New Economics Papers: this item is included in nep-cmp and nep-pbe
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Citations: View citations in EconPapers (5) Track citations by RSS feed

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