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Population dynamics of welfare stigma: welfare fraud versus incomplete take-up

Author

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  • Jun-ichi Itaya

    (School of Economics, Department of Law and Economics, Hokusei Gakuen University)

  • Kenichi Kurita

    (Urban Institute and Faculty of Social and Cultural Studies, Kyushu University)

Abstract

This study investigates the conditions under which welfare fraud and incomplete take-up emerge simultaneously and persist for a long time, which has been observed in many countries, particularly Japan and Germany. To do this, we extend models of statistical discrimination and taxpayers’ resentment to simple models of population dynamics. We find two stable boundary equilibria in the first model. One of these equilibria entails low welfare fraud and $$100\%$$ 100 % incomplete take-up, and the other entails high welfare fraud and $$100\%$$ 100 % take-up. In contrast, we find a unique stable equilibrium in the tax resentment model, which is interior and thus allows for the coexistence of welfare fraud and incomplete take-up in a long run. Hence, we conclude that this unique long-run equilibrium of the dynamic taxpayers’ resentment model provides a better explanation for the observation of simultaneous and persistent presence of welfare fraud and incomplete take-up in actual economies.

Suggested Citation

  • Jun-ichi Itaya & Kenichi Kurita, 2024. "Population dynamics of welfare stigma: welfare fraud versus incomplete take-up," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(1), pages 1-28, March.
    • Handle: RePEc:spr:jopoec:v:37:y:2024:i:1:d:10.1007_s00148-024-01009-8
    DOI: 10.1007/s00148-024-01009-8
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    More about this item

    Keywords

    Stigma; Population game; Incomplete take-up; Welfare fraud; Non-take-up;
    All these keywords.

    JEL classification:

    • 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

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