Participation rates in government transfer programs: application to housing allowances

by C. Peter Rydell, John E. Mulford, Lawrence W. Kozimor

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General model of participation in a transfer program, with application to data from housing allowance programs in Brown County, Wisconsin, and St. Joseph County, Indiana. Estimates of the model parameters are obtained from pooled data for the two sites, and the fitted model is used to estimate the equilibrium level of participation and the time required to reach it. The model predicts that the current participation rate--40 percent--will rise to a maximum of 51 percent when equilibrium is reached. Although below expectations, 51 percent is not low compared with other government transfer programs; it is about the same as New York City's welfare and food stamp programs, for example. The model provides insights into the dynamics of government transfer programs, and suggests that the most practical way to increase participation is to increase the enrollment rate.

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