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The Welfare Cost of Means-Testing: Pensioner Participation in Income Support

By Stephen Pudney, Monica Hernandez and Ruth Hancock


We estimate parametric and semi-parametric binary choice models of benefit take-up by British pensioners and develop methods, based on the compensating variation, of inferring the cash-equivalent value of disutility arising from stigma or complexity of the claims process, taking account of the self-selection induced by take-up. We extend this to incorporate the claim costs borne by welfare-recipients into the measurement of pensioner poverty. We find that allowing for implicit claim costs in this way has a non-negligible impact on poverty measurement

Topics: benefit take-up, program participation, pensions, welfare, poverty
Publisher: Dept. of Economics, University of Leicester
Year: 2002
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