2023 Fiscal Year Final Research Report
Optimal in-kind benefits in means-tested programs
| Project/Area Number |
20K01676
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Multi-year Fund |
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| Section | 一般 |
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| Review Section |
Basic Section 07040:Economic policy-related
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| Research Institution | National Graduate Institute for Policy Studies |
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Principal Investigator |
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| Project Period (FY) |
2020-04-01 – 2024-03-31
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| Keywords | in-kind transfer / home production / optimal taxation |
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| Outline of Final Research Achievements |
We investigate whether welfare benefits should be provided in-kind or in-cash. We examine whether we can rationalize an in-kind benefit when means-testing is already in place.
We characterize the optimal allocations when a social planner does not observe individuals’ productivity. A solution is that individuals reporting low productivity should have their leisure overprovided and consumption goods under-provided. Our study extends this finding in a framework with home production. We argue that since individuals can reallocate the over-provided leisure time to home production activities, high and low productive individuals value input goods for home production differently, and the social planner can refine its allocation scheme to better target low productive individuals. Since high-productivity individuals can meet means-testing requirement by working less, certain distortions on consumption should be put in place. In-kind provision can simplify the implementation of these distortions.
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| Free Research Field |
Quantitative macroeconomics, public economics
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| Academic Significance and Societal Importance of the Research Achievements |
Our findings contribute to the reform of the SNAP program (food stamps in the US). Eligible beneficiaries can use SNAP transfers only for non-prepared food. We show that from the theoretical standpoint, it may be optimal to provide in-kind goods that are substitutes with time.
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