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The Dynamics of Social Assistance Benefit Receipt in Germany: State Dependence Before and After the Hartz Reforms

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  • Sebastian Königs

Abstract

In this paper, we study the dynamics of social assistance benefit receipt in Germany using annual survey data from the German Socio-Economic Panel (SOEP) for the years 1995-2011. Rates of benefit receipt were stable in Germany at around 8% in the 1990s but started rising in 2001 to peak at over 12% in 2006. We show that this increase in the receipt rate can be attributed to lower exit rates from benefit receipt since 2001. In the econometric part of the paper, we study state dependence in social assistance benefit receipt, i.e. the question to what extent benefit receipt today predicts the probability of future benefit receipt. We estimate a series of dynamic random-effects probit models that control for unobserved heterogeneity and endogeneity of the initial conditions and indeed find considerable evidence of state dependence. Our estimates suggest that benefit receipt one year ago raises the likelihood of benefit receipt today by a factor of 3, which corresponds to an average partial effect of about 14 percentage points. The level of state dependence differs between subsamples and is larger in absolute terms for women, Eastern German residents, and migrants, for whom receipt rates are higher. Studying variations over time, we find a rise in the level of state dependence after the 2005 Hartz reforms in Eastern Germany. We attribute this effect to a drop in average predicted entry rates into benefit receipt without a corresponding fall in predicted benefit persistence rates. We do not identify any comparable change in structural dependence for Germany as a whole or other subsamples we look at. Since a reform that contributes to keeping individuals off benefits while doing little to raise exit rates would increase state dependence but might nonetheless be considered as beneficial, our findings should not be understood as a verdict on the success or failure of the Hartz reforms. Cet article étudie la dynamique des prestations d’assistance sociale reçues en Allemagne, sur la période 1995-2011, à partir des données annuelles du Panel socio-économique allemand (SOEP). Dans les années 90, le taux des prestations d’assistance sociale en Allemagne est resté stable autour de 8 % puis a commencé à augmenter à partir de 2001 pour dépasser 12% en 2006. Cette augmentation s’explique principalement par des taux de sortie plus faible du système de prestations à partir de 2001. La partie de l’article consacrée à l’analyse économétrique étudie la probabilité qu’une personne bénéficie dans l’avenir de prestations en fonction de recevoir des prestations aujourd’hui. Une série de modèles probit dynamique à effets aléatoires est utilisée en contrôlant l'hétérogénéité non observée et l'endogénéité des conditions initiales. Les résultats étayent l’hypothèse d’une dépendance entre les états . Les estimations suggèrent que le fait d’avoir reçu une prestation sociale un an auparavant augmente par un facteur de 3 la probabilité de bénéficier d’une prestation un an après, ce qui correspond en moyenne à un effet partiel de 14 points de pourcentage. Le niveau de dépendance varie selon les différents sous-échantillons : en termes absolus, la dépendance est plus importante chez les femmes, les résidents de l’Allemagne de l’Est et les immigrants, pour lesquels le taux de réception des prestations est plus élevé. L’analyse temporelle des variations de la dépendance entre les états montre une augmentation de celle-ci en Allemagne de l’Est après les réformes Hartz de 2005. Ce phénomène peut être attribué à une diminution du taux d’entrée prédit par le modèle, sans qu’elle s’accompagne d’une diminution des taux attendus de persistance des prestations. On ne trouve aucun changement comparable de la structure de la dépendance pour l’ensemble de l’Allemagne ou d’autres sous-échantillons. En principe, toute réforme qui rend moins probable la réception de prestations sociales tout en ne favorisant pas la sortie du système fait augmenter le taux de dépendance mais pourrait cependant être considérée comme bénéfique. Dans ce sens, nos résultats ne sont pas à interpréter comme un jugement positif ou négatif sur les réformes Hartz.

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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Social, Employment and Migration Working Papers with number 136.

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Date of creation: 10 Oct 2013
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Handle: RePEc:oec:elsaab:136-en

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