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State Dependence in Social Assistance Benefit Receipt in Germany Before and After the Hartz Reforms

In: Safety Nets and Benefit Dependence

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  • Sebastian Königs

Abstract

I study state dependence in social assistance receipt in Germany using annual survey data from the German Socio-Economic Panel for the years 1995–2011. There is considerable observed state dependence, with an average persistence rate in benefits of 68 per cent comparing to an average entry rate of just above 3 per cent. 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 around the years of the Hartz reforms.

Suggested Citation

  • Sebastian Königs, 2014. "State Dependence in Social Assistance Benefit Receipt in Germany Before and After the Hartz Reforms," Research in Labor Economics, in: Safety Nets and Benefit Dependence, volume 39, pages 107-150, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:rleczz:s0147-912120140000039003
    DOI: 10.1108/S0147-912120140000039003
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    Cited by:

    1. Edwin Fourrier-Nicolaï & Michel Lubrano, 2020. "Bayesian inference for TIP curves: an application to child poverty in Germany," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 18(1), pages 91-111, March.

    More about this item

    Keywords

    Social assistance; welfare benefits; state dependence; Germany; Hartz reforms; I38; J60; J64; C23;
    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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