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An Empirical Analysis of Welfare Dependence in the Czech Republic

Author

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  • Martin Guzi

    (Masaryk University, Brno, Czech Republic, and CELSI (Central European Labor Studies Institute), Bratislava, Slovakia)

Abstract

The scope of this paper is to empirically test whether the potential disincentive effects of the Czech social security system affected the labor flows from unemployment to employment over the period 1995–2005. Combining individual data from the Czech Labor Force Survey and the Czech Household Income Survey, the analysis exploits the difference between the available social benefits and the net household income when a person is employed. Estimates imply that individuals who receive relatively higher social bene?ts are also more likely to remain unemployed and it is shown that the groups most affected are those with low education and long spells of unemployment. The paper confirms that the level and persistence of unemployment in the Czech Republic after 2000 can be partly attributed to the nationwide level of social support that constitutes a welfare trap for some individuals.

Suggested Citation

  • 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.
    • Handle: RePEc:fau:fauart:v:64:y:2014:i:5:p:407-431
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    References listed on IDEAS

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    Cited by:

    1. Franziska Gassmann & Lorena Zardo Trindade, 2019. "Effect of Means-Tested Social Transfers on Labor Supply: Heads Versus Spouses—An Empirical Analysis of Work Disincentives in the Kyrgyz Republic," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 31(2), pages 189-214, April.
    2. Alzbeta Mullerova, 2017. "Family policy and maternal employment in the Czech transition: a natural experiment," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(4), pages 1185-1210, October.
    3. Petr Janský & Klára Kalíšková & Daniel Münich, 2016. "Does the Czech Tax and Benefit System Contribute to One of Europe’s Lowest Levels of Relative Income Poverty and Inequality?," Eastern European Economics, Taylor & Francis Journals, vol. 54(3), pages 191-207, May.

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    More about this item

    Keywords

    labor supply; welfare trap; net replacement rate;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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