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

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 7977

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: Germany ; state dependence ; welfare benefits ; social assistance ; Hartz reforms

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Königs, Sebastian
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/93372
• Last update: 10.03.2025, 11:42 AM CET