Abstract

The project aims at endogenising the take-up behaviour of households with a potential eligibility to means-tested social assistance (SGB II). Up to now the IAB microsimulation model assumes that all households eligible to an SGB II benefit will claim their entitlement. Thus, the number of households with a small entitlement will typically be overestimated. The take-up of SGB II benefits has an impact the simulated effect of social assistance reforms, both for fiscal effects and for labour supply. An assumed take-up rate of 100 per cent will also lead to biased estimated of the households' preferences for income and leisure. Therefore, this project aims at estimating a joint model of labour supply and means-tested benefit take-up.