Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/226323
Authors: 
Itaya, Jun-ichi
Kurita, Kenichi
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8621
Abstract: 
There are two important problems in welfare benefit programs: the prevalence of welfare fraud, in which ineligible people receive welfare benefits, and incomplete take-up, whereby eligible poor people are reluctant to claim welfare benefits. This study investigates both of these opposing phenomena using simple replicator models of statistical discrimination and the tax-payer resentment view welfare stigma suggested by Besley and Coate (1992). We find multiple stable equilibria in the long run, one of which entails low welfare fraud and 100% incomplete take-up and the other of which entails high welfare fraud and complete take-up in either model, and, moreover, that an interior stationary equilibrium that allows for the coexistence of welfare fraud and incomplete take-up is unstable in the model of statistical discrimination view welfare stigma, but it is stable in the model of the tax-payer resentment view welfare stigma. This difference arises from the different nature of stigma cost functions in these two models.
Subjects: 
stigma
replicator dynamics
incomplete take-up
welfare fraud
non-take-up
JEL: 
H31
H53
I38
Document Type: 
Working Paper

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