Clasificación Jel
H53, I38
N° Páginas
Welfare Eligibility Manipulation: Evidence From Georgia

Optimal targeting of social aid is a fundamental issue in public policy design. A key aspect is to create welfare systems that are manipulation-proof. Using a rich tapestry of administrative and survey data, we study household-driven manipulation of a nationwide welfare program in Georgia. We start by documenting sizable bunching at a benefit discontinuity. Next, we build a Becker (1968)-style model of manipulation, which we use to inform our empirical strategy – a fuzzy difference-in-discontinuity design. Our estimation strategy and rich data allow us to (i) characterize those households who manipulate at a key welfare score threshold, (ii) document how these households manipulate their eligibility scores, and (iii) provide evidence on the downstream consequences of manipulation – in the labor market, in household expenditure patterns, and for a raft of child outcomes. We document that manipulation of scores appears to be needs-driven – it is rural and marginally poorer households who are more likely to manipulate. These households do so primarily by hiding rural assets prior to inspection. We find meaningful increases in the labor supply of women in manipulating households, and a concomitant increase in expenditure on the children in the household, likely driven by an economically-driven increase in the bargaining power of women within the household. Our labor supply findings are driven by women in households with unsuccessful manipulation attempts – we do not document a labor supply response for this in households where manipulation succeeds. This suggests a crowd-out effect of welfare income on labor market participation for women. We estimate the cost to government coffers of manipulation and find the form of welfare manipulation that we study in this work leads to a cost that is 25% of the initial expenditure on our target households. We conclude the paper by comparing our approach to the standard alternative in the literature – bunching estimators – and show, that in our setting, bunching estimators are consistent with our approach of welfare eligibility manipulation.

Palabras clave
Welfare Eligibility, Manipulation, Public Policy Design, Child Skill Investment