The dynamics of social assistance benefit receipt in Germany: State dependence before and after the 'Hartz reforms'

Arbeitspapier

In this article, we 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. We show that there is considerable observed state dependence, with an average persistence rate in benefits of 68% compared to an average entry rate of below 4%. To identify a possible structural component in state dependence, we estimate a series of dynamic random-effects probit models that control for unobserved heterogeneity and endogeneity of initial condition. We find evidence of substantial state dependence in benefit receipt. Our estimates suggest that benefit receipt one year ago raises the likelihood of benefit receipt today by a factor of 3.7. This corresponds to an average partial effect of over 14 percentage points. Average predicted entry and persistence rates are much higher in Eastern Germany than in Western Germany, absolute levels of structural state dependence however are comparable. We do not find evidence for much time variation in state dependence. This holds true also for the time around the Hartz reforms.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SOEPpapers on Multidisciplinary Panel Data Research ; No. 628

Classification and Topics

• Classification: Wirtschaft ; Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs ; Mobility, Unemployment, Vacancies, and Immigrant Workers: General ; Unemployment: Models, Duration, Incidence, and Job Search ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
• Subject: social assistance ; welfare benefits ; state dependence ; Hartz reforms

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Königs, Sebastian
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/94204
• Last update: 10.03.2025, 11:46 AM CET