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Model of endogenous welfare stigma: Statistical discrimination view

Kurita, Kenichi and Hori, Nobuaki and Katafuchi, Yuya (2019): Model of endogenous welfare stigma: Statistical discrimination view.

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Abstract

This paper tries to challenge two puzzles in the welfare benefit program. The first puzzle is non-take-up welfare which means poor people do not take-up welfare even though they are approved to take-up. Second, empirical evidence suggests that there may exist the inverse U-shaped relationship between benefit level and beneficiary ratio. We present a model of welfare stigma as a hypothesis to explain the above puzzles. Specifically, we investigate the statistical discrimination view model. Results are summarized as the relationship between two types of elasticity.

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