Missing Out on Social Assistance: The Consequences of Benefit Non Take-Up in the UK

Benefit non take-up refers to situations in which individuals or households do not claim social benefits to which they are legally entitled, due to low expected financial gains or costs associated with claiming, including administrative complexity, time and effort, stigma (Moffitt, 1983). While public debate has often focused on benefit fraud, non take-up is considerably more widespread (Ko and Moffitt, 2022). Low take-up undermines the redistributive capacity of welfare states and limits their effectiveness in protecting households against poverty and economic insecurity (Van Oorschot, 1991; Matsaganis et al., 2008). An alternative interpretation, however, views non take-up as a screening mechanism that contains public expenditure by discouraging claims from less needy households (Nichols and Zeckhauser, 1982). In the UK, existing micro-level studies of benefit take-up are relatively dated and rely largely on cross-sectional data (Blundell et al., 1987; Pudney et al., 2006; Zantomio et al., 2010). As a result, there is little evidence on the longer-term consequences of non take-up, partly due to the lack of longitudinal data linking benefit eligibility to observed outcomes. This study addresses this gap by combining longitudinal survey data with tax-benefit microsimulation, complementing recent work on the determinants of non take-up in the UK (Vella and Richiardi, 2024) by focusing instead on its consequences. The main objective of the study is to examine the consequences of non take-up of means-tested benefits for eligible individuals over time, with a focus on labour market outcomes, poverty, physical and mental health, and subjective wellbeing. The analysis combines the UK Household Longitudinal Study (UKHLS) with the UK tax-benefit microsimulation model, UKMOD. UKHLS provides annual panel data on income, employment, household composition, health, and wellbeing. Embedding UKMOD within a longitudinal survey represents a key methodological innovation, allowing benefit eligibility to be reconstructed consistently over time and take-up to be modelled dynamically. Non take-up is identified by comparing observed benefit receipt, based on self-reported information in UKHLS, with simulated eligibility derived from UKMOD. The analysis covers the main social assistance programmes in the UK, namely Universal Credit and its legacy benefits, Pension Credit, and Child Benefit. Prior research shows that eligible individuals who claim benefits differ systematically from those who do not, with non-claimants typically having higher incomes, higher levels of education, and lower dependency loads. In addition, take-up is subject to state dependency, in the sense that individuals who claim benefits once are likely to continue claiming in subsequent periods, and vice versa. To address this selection, propensity score matching is used to construct comparable groups of eligible claimants and eligible non-claimants based on observed characteristics measured prior to take-up. Outcomes are then analysed using a difference-in-differences design, comparing changes over time between the two groups. In addition, individual fixed effects regressions are estimated, exploiting within-person variation in take-up status across waves.