How Tight are Safety-Nets in Nordic Countries? Evidence from Finnish Register Data

26 Pages Posted: 11 Sep 2007

See all articles by Olivier Bargain

Olivier Bargain

IZA Institute of Labor Economics; University College Dublin (UCD)

Herwig Immervoll

World Bank, Europe and Central Asia; Organization for Economic Co-Operation and Development (OECD) - Social Policy Division; IZA Institute of Labor Economics; ISER Institute for Social and Economic Research; University of Canberra - National Centre for Social and Economic Modelling (NATSEM); United Nations - European Centre for Social Welfare Policy and Research

Heikki Viitamaki

Government of the Republic of Finland - VATT Institute for Economic Research

Date Written: August 2007

Abstract

The non take-up of social assistance benefits due to claim costs may seriously limit the anti-poverty effect of these programs. Yet, available evidence is fragmented and mostly relies on interview-based data, potentially biased by misreporting and measurement errors on both benefit entitlement and income levels used to assess eligibility. In this paper, we use Finnish administrative data to compare eligibility and actual receipt of social assistance by working-age families during the post-recession period (1996-2003). Possible errors due to time-period issues and discretionary measures by local agencies are carefully investigated. Non take-up is found to be substantial - between 40% and 50% - and increasing during the period. Using repeated cross-section estimations, we identify a set of stable determinants of claiming behavior and suggest that the increasing trend is mainly due to a composition effect, i.e. a decline in the proportion of groups with higher claiming propensity. We finally discuss the targeting efficiency of the social assistance scheme.

Keywords: take-up, social assistance, poverty, register data

JEL Classification: D31, H31, H53, I38

Suggested Citation

Bargain, Olivier and Immervoll, Herwig and Viitamaki, Heikki, How Tight are Safety-Nets in Nordic Countries? Evidence from Finnish Register Data (August 2007). IZA Discussion Paper No. 3004, Available at SSRN: https://ssrn.com/abstract=1012577

Olivier Bargain (Contact Author)

IZA Institute of Labor Economics ( email )

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Herwig Immervoll

World Bank, Europe and Central Asia ( email )

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Organization for Economic Co-Operation and Development (OECD) - Social Policy Division ( email )

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ISER Institute for Social and Economic Research ( email )

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University of Canberra - National Centre for Social and Economic Modelling (NATSEM) ( email )

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United Nations - European Centre for Social Welfare Policy and Research ( email )

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Heikki Viitamaki

Government of the Republic of Finland - VATT Institute for Economic Research ( email )

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Helsinki, FIN-00531
Finland

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