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Spatial Variation in Incentives to Work and Hysteresis in Welfare

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  • Kristof Dascher

Abstract

This paper suggests a novel explanation of the steady rise in Germany's welfare recipient numbers. In the paper's model, there are disadvantaged households employed in a city with few amenities (a bad-amenity city) who would prefer to receive welfare in a city with many amenities (a good-amenity city). They can be kept out by the good-amenity city's local government but only until a recession sets in. Then they do move from employment in the bad-amenity city into welfare in the good-amenity city. Hysteresis in welfare results.

Suggested Citation

  • Kristof Dascher, 2002. "Spatial Variation in Incentives to Work and Hysteresis in Welfare," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(4), pages 529-550, December.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(2002/200312)59:4_529:sviitw_2.0.tx_2-k
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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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