The Transition from Welfare to Work and the Role of Potential Labor Income
It is often argued that the high level of welfare claims in Germany causes little incentive for workers with low productivity to seek for a job. We examine the influence of the ratio between estimated potential labor income and the welfare payment level on the probability of leaving social welfare. Using the GSOEP, we estimate a discrete time hazard rate model with competing risks and unobserved heterogeneity. Our results show that the ratio has a positive effect on the probability of leaving social welfare. This effect is especially relevant for households with a potential labor income higher than their welfare payment level.
|Date of creation:||Dec 2004|
|Date of revision:|
|Publication status:||published in: Journal of Applied Social Sciences Studies, 2005, 125 (1), 51-61|
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- Blank, Rebecca M., 1989. "Analyzing the length of welfare spells," Journal of Public Economics, Elsevier, vol. 39(3), pages 245-273, August.
- Barrett, Garry F., 2000. "The effect of educational attainment on welfare dependence: Evidence from Canada," Journal of Public Economics, Elsevier, vol. 77(2), pages 209-232, August.
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