- What stops Dutch households from taking up much needed benefits?
- Review of Income and Wealth
- Volume | Issue number
- 62 | 4
- Pages (from-to)
- Document type
- Faculty of Economics and Business (FEB)
- Amsterdam School of Economics Research Institute (ASE-RI)
It is common for individuals not to take up welfare benefits. The most common explanation is that people make a rational choice between the utility they expect from the benefit and the effort required to take-up. Most studies utilize surveys, which are subject to misreporting and measurement errors, to determine eligibility and non-take-up rates. This study uses a novel dataset based on administrative data sources, which provides a more accurate identification of eligible households and take-up. Furthermore, this study documents non-take-up of a compensation to which nearly 5 million Dutch households are entitled. The richness of the data allowed us to conduct a detailed analysis of key drivers of non-take-up. The analysis largely confirms the transaction-costs hypotheses. However, we found an unexpected effect. Although, in general, the probability of take-up increases when income decreases, those with the lowest income or wealth do not have the highest probability of take-up.
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