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Welfare participation and welfare dependence among the unemployed

Author

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  • Maria Melkersson
  • Jan Saarela

Abstract

We regard individual unemployment duration as an important determinant of individuals’ welfare dependence. Welfare receipt is modelled for a unique data set of 4,655 Finnish unemployed individuals. A two-stage binomial hurdle model is applied, and estimations are made by both ML and GMM. Disregarding the full interrelation between unemployment and welfare clearly underestimates the importance of the former. Unemployment has a clear impact on both the probability of welfare participation and on welfare dependence among recipients. Using a finite mixture model we find that there is a small minority of unemployed welfare recipients who are ‘locked-in in welfare dependence’. Copyright Springer-Verlag 2004

Suggested Citation

  • Maria Melkersson & Jan Saarela, 2004. "Welfare participation and welfare dependence among the unemployed," Journal of Population Economics, Springer;European Society for Population Economics, vol. 17(3), pages 409-431, August.
    • Handle: RePEc:spr:jopoec:v:17:y:2004:i:3:p:409-431
    DOI: 10.1007/s00148-004-0194-1
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    Cited by:

    1. Luis Ayala & Magdalena Rodríguez, 2010. "Explaining welfare recidivism: what role do unemployment and initial spells have?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(1), pages 373-392, January.

    More about this item

    Keywords

    I38; J64; Welfare receipt; unemployment duration; binomial hurdle model;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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