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State Dependence in Welfare Receipt: Transitions Before and After a Reform

  • Regina T. Riphahn
  • Christoph Wunder

We study state dependence in welfare receipt and investigate whether welfare transitions changed after a welfare reform. Using data from the German Socio-Economic Panel, we apply dynamic multinomial logit estimators and find that state dependence in welfare receipt is not a central feature of the German welfare system. We find that welfare transitions changed after the reform: transitions from welfare to employment became more likely and persistence in welfare and inactivity declined. We observe a large relative increase in transitions from employment to welfare. Immigrants’ responsiveness to the labor market situation increased after the reform.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4485.

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Date of creation: 2013
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Handle: RePEc:ces:ceswps:_4485
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