Replicator Evolution of Welfare Stigma: Welfare Fraud vs. Incomplete Take-Up

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 8621

Classification and Topics

• Classification: Wirtschaft ; Fiscal Policies and Behavior of Economic Agents: Household ; National Government Expenditures and Welfare Programs ; Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
• Subject: stigma ; replicator dynamics ; incomplete take-up ; welfare fraud ; non-take-up

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Itaya, Jun-ichi ; Kurita, Kenichi
• Event: Veröffentlichung
• (who): Center for Economic Studies and Ifo Institute (CESifo)
• (where): Munich
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/226323
• Last update: 10.03.2025, 11:44 AM CET