Transfer program complexity and the take-up of social benefits

Henrik Jacobsen Kleven, Wojciech Kopczuk

Research output: Contribution to journalArticlepeer-review

73 Scopus citations

Abstract

We model complexity in social programs as a by-product of the screening process. While a more rigorous screening process may improve targeting efficiency, the associated complexity is costly to applicants and induces incomplete take-up. We integrate the study of take-up with the study of rejection (Type I) and award (Type II) errors, and characterize optimal programs when policy makers choose screening intensity (and complexity), an eligibility rule, and a benefit level. Consistent with many real-world programs, optimal programs feature high complexity, incomplete take-up, classification errors of both Type I and II and, in some cases, "excessive" benefits.

Original languageEnglish (US)
Pages (from-to)54-90
Number of pages37
JournalAmerican Economic Journal: Economic Policy
Volume3
Issue number1
DOIs
StatePublished - Feb 2011
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

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