Take it or leave it: (Non-) take-up behavior of social assistance in Germany

Analyzing the under-consumption of benefits in the German means-tested Social Assistance program using data from the German Socio-Economic Panel Study we estimate a high non-take-up rate of more than 60 percent. We find distinct differences across population groups and significant impacts of factors such as stigma, application costs and social ties. Specifically, we show that the rate varies greatly depending on the determination of eligibility. Results pertaining to the amount of unclaimed benefits are qualitatively similar to those for the non-take-up rate. As expected, the proportion of outstanding benefits that is not claimed by eligible households is lower than the non-take-up rate because small entitlement amounts are more likely to remain unclaimed. 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.