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Non-take-up of in-work benefits: determinants, benefit erosion and indexing

Author

Listed:
  • Diego Muñoz-Higueras

    (University of Valencia)

  • Stephan Köppe

    (University College Dublin)

  • Rafael Granell

    (University of Valencia)

  • Amadeo Fuenmayor

    (University of Valencia)

Abstract

Non-take-up of welfare schemes is a key concern of policy effectiveness. Building on studies that have shown the low take-up of minimum income schemes, our case study of Ireland’s Working Family Payment is the first to analyse non-take-up of an in-work benefit and its determinants with a special focus on labour market factors. Based on EU-SILC (2014–2019) we estimate a non-take-up rate between 63 and 76%, which poses a major obstacle for effective poverty prevention. Moreover, we stress that non-take-up of in-work benefits differs to minimum income schemes. We provide new evidence on how labour market characteristics play an important role in explaining non-take-up, especially self-employment and the interaction with unemployment benefits. Benefit erosion is a key factor in declining eligibility, which should be addressed by indexing wages and prices. Furthermore, we propose policy reforms around automatic enrolment or tax credits to mitigate non-take-up and alleviate in-work poverty.

Suggested Citation

  • Diego Muñoz-Higueras & Stephan Köppe & Rafael Granell & Amadeo Fuenmayor, 2024. "Non-take-up of in-work benefits: determinants, benefit erosion and indexing," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 58(1), pages 1-19, December.
    • Handle: RePEc:spr:jlabrs:v:58:y:2024:i:1:d:10.1186_s12651-024-00385-8
    DOI: 10.1186/s12651-024-00385-8
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    More about this item

    Keywords

    Non-take-up; Administrative design; In-work benefits; In-work poverty; Labour market characteristics; Working family payment;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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