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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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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2013/wp-cesifo-2013-11/cesifo1_wp4485.pdf
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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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  1. Sabine Klinger & Thomas Rothe, 2012. "Der Rückgang der Langzeitarbeitslosigkeit in Deutschland: Ein Erfolg der Hartz-Reformen oder konjunktureller Effekt?," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 132(1), pages 89-121.
  2. James P. Ziliak & David N. Figlio & Elizabeth E. Davis & Laura S. Connolly, 2000. "Accounting for the Decline in AFDC Caseloads: Welfare Reform or the Economy?," Journal of Human Resources, University of Wisconsin Press, vol. 35(3), pages 570-586.
  3. René Fahr & Uwe Sunde, 2009. "Did the Hartz Reforms Speed-Up the Matching Process? A Macro-Evaluation Using Empirical Matching Functions," German Economic Review, Verein für Socialpolitik, vol. 10, pages 284-316, 08.
  4. Joachim R. Frick & Olaf Groh-Samberg, 2007. "To Claim or Not to Claim: Estimating Non-take-up of Social Assistance in Germany and the Role of Measurement Error," SOEPpapers on Multidisciplinary Panel Data Research 53, DIW Berlin, The German Socio-Economic Panel (SOEP).
  5. Karin Edmark, 2009. "Migration Effects of Welfare Benefit Reform," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(3), pages 511-526, 09.
  6. Jorgen Hansen & Magnus Lofstrom, 2009. "The dynamics of immigrant welfare and labor market behavior," Journal of Population Economics, Springer, vol. 22(4), pages 941-970, October.
  7. Alan Barrett & Yvonne McCarthy, 2008. "Immigrants and Welfare Programmes: Exploring the Interactions between Immigrant Characteristics, Immigrant Welfare Dependence and Welfare Policy," Papers WP238, Economic and Social Research Institute (ESRI).
  8. Brewer, Mike & Duncan, Alan & Shephard, Andrew & Suarez, Maria Jose, 2006. "Did working families' tax credit work? The impact of in-work support on labour supply in Great Britain," Labour Economics, Elsevier, vol. 13(6), pages 699-720, December.
  9. Cappellari, Lorenzo & Jenkins, Stephen P., 2009. "The Dynamics of Social Assistance Benefit Receipt in Britain," IZA Discussion Papers 4457, Institute for the Study of Labor (IZA).
  10. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54.
  11. Martin Huber & Michael Lechner & Conny Wunsch & Thomas Walter, 2011. "Do German Welfare‐to‐Work Programmes Reduce Welfare Dependency and Increase Employment?," German Economic Review, Verein für Socialpolitik, vol. 12(2), pages 182-204, 05.
  12. Lorenzo Cappellari & Stephen P. Jenkins, 2008. "The Dynamics of Social Assistance Receipt: Measurement and Modelling Issues, with an Application to Britain," OECD Social, Employment and Migration Working Papers 67, OECD Publishing.
  13. Erdem, Tulin & Sun, Baohong, 2001. "Testing for Choice Dynamics in Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(2), pages 142-52, April.
  14. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," NBER Working Papers 8983, National Bureau of Economic Research, Inc.
  15. Caliendo, Marco & Uhlendorff, Arne, 2008. "Self-Employment Dynamics, State Dependence and Cross-Mobility Patterns," IZA Discussion Papers 3900, Institute for the Study of Labor (IZA).
  16. Burda, Michael C. & Hunt, Jennifer, 2011. "What Explains the German Labor Market Miracle in the Great Recession?," IZA Discussion Papers 5800, Institute for the Study of Labor (IZA).
  17. Caliendo, Marco & Hogenacker, Jens, 2012. "The German Labor Market after the Great Recession: Successful Reforms and Future Challenges," IZA Discussion Papers 6810, Institute for the Study of Labor (IZA).
  18. Stewart, Mark, 2006. "The Inter-related Dynamics of Unemployment and Low-Wage Employment," The Warwick Economics Research Paper Series (TWERPS) 741, University of Warwick, Department of Economics.
  19. Anders Skrondal & Sophia Rabe-Hesketh, 2009. "Prediction in multilevel generalized linear models," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 172(3), pages 659-687.
  20. Marianne P. Bitler & Hilary W. Hoynes, 2010. "The State of Social Safety Net in the Post-Welfare Reform Era," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 41(2 (Fall)), pages 71-147.
  21. Hilary Hoynes & Douglas L. Miller & Jessamyn Schaller, 2012. "Who Suffers during Recessions?," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 27-48, Summer.
  22. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  23. Dietz, Barbara, 1999. "Ethnic German Immigration from Eastern Europe and the former Soviet Union to Germany: the Effects of Migrant Networks," IZA Discussion Papers 68, Institute for the Study of Labor (IZA).
  24. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP): Scope, Evolution and Enhancements," SOEPpapers on Multidisciplinary Panel Data Research 1, DIW Berlin, The German Socio-Economic Panel (SOEP).
  25. Rabe-Hesketh, Sophia & Skrondal, Anders, 2013. "Avoiding biased versions of Wooldridge’s simple solution to the initial conditions problem," Economics Letters, Elsevier, vol. 120(2), pages 346-349.
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