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Transitions from Welfare to Employment: Does the Ratio between Labor Income and Social Assistance Matter?

Author

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  • Hilmar Schneider
  • Arne Uhlendorff

Abstract

It is often argued that the high level of welfare claims in Germany creates little incentive for workers with low productivity to seek for a job. We examine the influence of the ratio between estimated potential labor income and the welfare payment level on the probability of leaving social welfare. We estimate a discrete time hazard rate model with unobserved heterogeneity using representative micro data from the German Socio-Economic Panel Study (SOEP). Our results show that the ratio has a positive effect on the probability of leaving social welfare. This effect is especially relevant for households with a potential labor income higher than their welfare payment level.

Suggested Citation

  • Hilmar Schneider & Arne Uhlendorff, 2005. "Transitions from Welfare to Employment: Does the Ratio between Labor Income and Social Assistance Matter?," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 125(1), pages 51-61.
  • Handle: RePEc:aeq:aeqsjb:v125_y2005_i1_q1_p51-61
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    Citations

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    Cited by:

    1. Schneider Hilmar & Zimmermann Klaus F. & Uhlendorff Arne, 2013. "Ökonometrie vs. Projektdesign: Lehren aus der Evaluation eines Modellprojekts zur Umsetzung des Workfare-Konzepts," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 233(1), pages 65-85, February.
    2. Martin Guzi, 2014. "An Empirical Analysis of Welfare Dependence in the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 64(5), pages 407-431, November.
    3. Achatz, Juliane & Trappmann, Mark, 2011. "Arbeitsmarktvermittelte Abgänge aus der Grundsicherung : der Einfluss von personen- und haushaltsgebundenen Barrieren," IAB Discussion Paper 201102, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Schneider, Hilmar & Uhlendorff, Arne & Zimmermann, Klaus F., 2010. "Mit Workfare aus der Sozialhilfe? Lehren aus einem Modellprojekt," IZA Standpunkte 33, Institute for the Study of Labor (IZA).
    5. World Bank, 2015. "The Impact of Targeted Social Assistance on Labor Market in Georgia," World Bank Other Operational Studies 22502, The World Bank.

    More about this item

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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