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The Dynamics of Social Assistance Benefit Receipt in Germany: State Dependence Before and After the 'Hartz Reforms'

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  • Königs, Sebastian

    (OECD)

Abstract

In this article, I study state dependence in social assistance receipt in Germany using annual survey data from the German Socio-Economic Panel (SOEP) for the years 1995-2011. There is considerable observed state dependence, with an average persistence rate in benefits of 68% comparing to an average entry rate of just above 3%. To identify a possible structural component, I estimate a series of dynamic random-effects probit models that control for observed and unobserved heterogeneity and endogeneity of initial conditions. I find evidence of substantial structural state dependence in benefit receipt. Estimates suggest that benefit receipt one year ago is associated with an increase in the likelihood of benefit receipt today by a factor of 3.4. This corresponds to an average partial effect of 13 percentage points. Average predicted entry and persistence rates and the absolute level of structural state dependence are higher in Eastern Germany than in Western Germany. I find only little evidence for time variation in state dependence including for the years around the Hartz reforms.

Suggested Citation

  • Königs, Sebastian, 2014. "The Dynamics of Social Assistance Benefit Receipt in Germany: State Dependence Before and After the 'Hartz Reforms'," IZA Discussion Papers 7977, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp7977
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    Cited by:

    1. Kerstin Bruckmeier & Katrin Hohmeyer & Stefan Schwarz, 2018. "Welfare receipt misreporting in survey data and its consequences for state dependence estimates: new insights from linked administrative and survey data," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 52(1), pages 1-21, December.
    2. Spermann, Alexander, 2014. "Zehn Jahre Hartz IV – Was hilft Langzeitarbeitslosen wirklich?," IZA Standpunkte 76, Institute of Labor Economics (IZA).
    3. Alexander Spermann, 2015. "How to fight long-term unemployment: lessons from Germany," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-15, December.
    4. Coban, Mustafa, 2017. "Wage mobility, wage inequality, and tasks: Empirical evidence from Germany, 1984-2014," Discussion Paper Series 139, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    5. Olga Grigoriev & Gabriele Doblhammer, 2022. "Does the Mortality of Individuals with Severe Disabilities Contribute to the Persistent East–West Mortality Gap Among German Men?," European Journal of Population, Springer;European Association for Population Studies, vol. 38(2), pages 247-271, May.
    6. repec:iab:iabjlr:v:52:i:1:p:art.16 is not listed on IDEAS
    7. Bruckmeier, Kerstin & Hohmeyer, Katrin & Schwarz, Stefan, 2018. "Welfare receipt misreporting in survey data and its consequences for state dependence estimates: new insights from linked administrative and survey data," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 52(1), pages 1-16.
    8. H. Xavier Jara & Katrin Gasior & Mattia Makovec, 2020. "Work Incentives at the Extensive and Intensive Margin in Europe: The Role of Taxes, Benefits and Population Characteristics," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 152(2), pages 705-778, November.
    9. Regina T. Riphahn & Christoph Wunder, 2016. "State dependence in welfare receipt: transitions before and after a reform," Empirical Economics, Springer, vol. 50(4), pages 1303-1329, June.
    10. Achatz, Juliane & Schels, Brigitte, 2020. "Übergang von der Schule ins Erwerbsleben: Ein Arbeitslosengeld-II-Bezug muss nicht von Dauer sein (School-to-work transition: Basic income support is not necessarily permanent)," IAB-Kurzbericht 202014, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    11. Sinem H. Ayhan & Selin Pelek, 2020. "State Dependence in Welfare Benefits in a Non‐Welfare Context," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(3), pages 711-735, September.
    12. Bruckmeier, Kerstin & Hohmeyer, Katrin & Schwarz, Stefan, 2018. "Welfare receipt misreporting in survey data and its consequences for state dependence estimates: new insights from linked administrative and survey data," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 52(1), pages .16(1-21).

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    More about this item

    Keywords

    Hartz reforms; social assistance; welfare benefits; state dependence; Germany;
    All these keywords.

    JEL classification:

    • 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
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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