(joint work with Tomer Blumkin and Tuomas Kosonen)

 

Abstract: We analyse to what extent the complexity of benefit rules affects take-up in a setting where the effects of complexity can be separated from other potential causes of non-take-up. The benefit we study is extensively used by individuals from all socioeconomic groups, namely the child homecare allowance in Finland. We use individual-level data on all mothers of young children, together with municipal-level data on the application rules for the benefit. Variation in the rules between municipalities and over time is used to estimate the causal effect of complexity on take-up.We find in a differences-in-differences setting that complexity has a very large effect on take-up. Complex application procedures cause individuals to forego a benefit of approximately 200 € per month, potentially for 2 years.