Take It or Leave It: (Non-)Take-Up Behavior of Social Assistance in Germany

Abstract

Analyzing the under-consumption of benefits in the German means-tested Social Assistance program using data from the German Socio-Economic Panel Study we confirm recent high estimates of a non-take-up rate of more than 60 percent. In light of likely measurement errors in income and in our simulation of household needs, we provide a range of estimates yielding useful boundaries for the non-take-up rate. We show that the rate varies greatly depending on the determination of eligibility. Simulation results pertaining to the amount of unclaimed benefits are qualitatively similar to those for the non-take-up rate. In our multivariate analyses on determinants of (non-)take-up behavior we find distinct differences across population groups and significant impacts of proxies for stigma, application costs and social ties.