Exits from and returns to welfare benefit receipt in Germany: Cumulative disadvantages or a different kettle of fish?

"In 2005, Germany introduced the integrated welfare benefit “unemployment benefit II” for needy individuals capable of working and their families. In line with international trends, the benefit system is characterised by a broad definition of eligibility and a focus on labour market integration through activation. The heterogeneous recipient groups comprise not only unemployed individuals but also, e.g. low-wage and part-time workers and recipients with family responsibilities. Not only individual employment take-up can enable exits from benefit receipt, but also changes in household composition or household income. A considerable share of exits is only temporary, i.e. former recipients become dependent on benefits again after a short time. Using rich administrative data and estimating discrete-time hazard rate models, we analyse non-employed benefit recipients’ chances to exit from and to remain independent of benefit receipt considering different exit routes. We find that employment-related exits from benefit receipt are more stable than others are. Labour market resources are important particularly for employment-related exits, but do not safeguard former recipients from returning to benefit receipt. Among sociodemographic characteristics, cumulative disadvantages for foreign citizens and for the labour market integration of older recipients emerge in that they are associated with low exit and high return probabilities. The results call for differentiated measures addressing not only specific subgroups but also different exit strategies." (Author's abstract, IAB-Doku) ((en))