The Netherlands Institute for Social Research (SCP) has developed a distribution method for the distribution of funds for the income part of the Participation Act (Participatiewet). This method was first used for the distribution of funds amongst municipalities in 2015. The explanatory model was estimated based on sample data from the Labour Force Survey (Enquête Beroepsbevolking; EBB). However, not all EBB data are representative at the municipal level. Therefore, a reweighting is necessary to translate the outcomes of the explanatory model to municipal budgets.

This report describes the further development of this distribution model. The further development has resulted in a number of model improvements. The most important change in the 2017 model is that register data were used rather than survey data from the EBB. As a result, every Dutch household is included in the model and no reweighting is necessary. In addition, the number of explanatory factors in the model can be increased. For two characteristics no register data are available and alternative characteristics were developed.

Furthermore, the theoretical underpinning of the choice of distribution characteristics for the 2017 model has been extended. Based on economic theory a basic set of explanatory variables has been selected that determine the probability of social assistance for a household. Finally, the model specification has been modified and the normative amount that is used for the translation to municipal budgets has been adapted. The normative amounts now take into account the age and family composition of households and contain the cost sharing norm that has been in force since 1 January 2015.