Estimating the Impact of a Policy Reform on Welfare Participation: The 2001 extension to the Minimum Income Guarantee for UK pensioners

Abstract

In 2001 the Minimum Income Guarantee system for UK pensioners was reformed, changing the structure and level of benefits. We evaluate the behavioural response to this reform, using nonparametric analysis of a sample of data on pensioners interviewed in the Family Resources Survey before and another interviewed after the reform. They are matched in terms of simulated entitlements and demographic characteristics, using various matching options. We argue that this approach is less vulnerable to specification and measurement error than the usual parametric analysis. The take-up response is found to be significant and positive, in contrast with parametric results.