Does Information Increase the Take-Up of Social Benefits? Evidence from a New Benefit Program

Abstract

The effectiveness of transfer programs can be significantly reduced if eligible individuals fail to apply for them. In this paper we study the impact of information provision on the take-up of social benefits. We exploit the implementation of the guarantee pension program in Finland in 2011, which offered a minimum monthly pension (688 euros) to low-income pensioners. The Finnish Social Insurance Institution sent information letters and application forms to a portion of the eligible population a month before implementation. We find clear evidence that this mailing significantly increased take-up and prompted pensioners to apply sooner, showing that simple and inexpensive mailings can have a large effect on benefit take-up among individuals outside the labor force.

Keywords: Take-up of social benefits; information

JEL Classification: H24, H55, D03