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Income Support, (Un-)Employment and Well-Being

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  • Clemens Hetschko
  • Ronnie Schöb
  • Tobias Wolf

Abstract

Using specific panel data of German welfare benefit recipients, we investigate the nonpecuniary life satisfaction effects of in-work benefits. Our empirical strategy combines difference-in-difference designs with synthetic control groups to analyze transitions of workers between unemployment, regular employment and employment accompanied by welfare receipt. Working makes people generally better off than being unemployed, but employed welfare recipients do not reach the life satisfaction level of regular employees. This implies that welfare receipt entails non-compliance with the norm to make one’s own living. Our findings allow us to draw cautious conclusions on employment subsidies paid as welfare benefits.

Suggested Citation

  • Clemens Hetschko & Ronnie Schöb & Tobias Wolf, 2016. "Income Support, (Un-)Employment and Well-Being," CESifo Working Paper Series 6016, CESifo.
    • Handle: RePEc:ces:ceswps:_6016
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    Cited by:

    1. Ronnie Schöb, 2017. "Ungleichheit und Zufriedenheit – Anmerkungen zur Ungleichheitsdebatte," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 24(04), pages 32-35, August.
    2. Schmitz, Sebastian, 2017. "The effects of Germany's new minimum wage on employment and welfare dependency," Discussion Papers 2017/21, Free University Berlin, School of Business & Economics.
    3. Feld, Lars P. & Schmidt, Christoph M. & Schnabel, Isabel & Truger, Achim & Wieland, Volker, 2019. "Den Strukturwandel meistern. Jahresgutachten 2019/20 [Dealing with Structural Change. Annual Report 2019/20]," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201920, February.
    4. Nikolova, Milena, 2019. "Switching to self-employment can be good for your health," Journal of Business Venturing, Elsevier, vol. 34(4), pages 664-691.
    5. Nikolova, Milena, 2018. "Self-Employment Can Be Good for Your Health," GLO Discussion Paper Series 226, Global Labor Organization (GLO).

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    More about this item

    Keywords

    life satisfaction; subsidized employment; unemployment; income support; in-work benefits; social norms;
    All these keywords.

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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