The welfare cost of means‐testing: pensioner participation in income support |
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Authors: | Monica Hernandez Stephen Pudney Ruth Hancock |
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Institution: | 1. Department of Economics, University of Sheffield, UK;2. Institute for Social and Economic Research, University of Essex, Colchester, UK;3. Department of Health and Human Sciences, University of Essex, Colchester, UK |
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Abstract: | We estimate parametric and semi‐parametric binary choice models of benefit take‐up by British pensioners and use a revealed preference argument to infer the cash‐equivalent value of disutility arising from stigma or complexity of the claims process. These implicit costs turn out to be relatively small, averaging about £3–4 per week across Income Support recipients. Using the Foster–Greer–Thorbecke measure of poverty among pensioners, we find that allowing for implicit claim costs incurred by benefit recipients raises the measured degree of poverty by not more than 13%. Copyright © 2007 John Wiley & Sons, Ltd. |
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