The antipoverty performance of universal and means-tested benefits with costly take-up
No 16/12, ImPRovE Working Papers from Herman Deleeck Centre for Social Policy, University of Antwerp
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)
New Economics Papers: this item is included in nep-cmp and nep-pbe
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