Income Support Systems, Labor Market Policies and Labor Supply: The German Experience

This paper studies the patterns of welfare dependence among first generation immigrants and natives in Germany before and after a substantial recent reform of the welfare system. Using data from the German Socio-Economic Panel Study, the analysis presents life cycle trajectories of transfer receipt for immigrants and natives and studies the correlation between contextual factors and transfer receipt. We find no statistically significant differences in the probability of transfer receipt between immigrants and natives once socioeconomic characteristics are taken into account. Being a single parent, labor market status, and human capital are most closely correlated with the incidence of transfer receipt for both natives and immigrants. Interestingly, recent welfare reforms did not reverse prior patterns of welfare dependence. JEL Codes: I38, J61Recently, Haisken-DeNew and Sinning (2010) showed that the extent of social deprivation was particularly concentrated among older immigrants compared to natives.

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Welfare receipt misreporting in survey data and its consequences for state dependence estimates: new insights from linked administrative and survey data

Bruckmeier

Hohmeyer

Schwarz

2018

J Labour Market Res

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In many advanced welfare states, welfare recipients often receive benefits for long periods. This persistence of welfare receipt can be caused by two distinct mechanisms: genuine or spurious state dependence. Knowledge of which of the two mechanisms drives the observed state dependence is important because the policy implications are different. Most of the empirical evidence on state dependence relies on survey data. However, survey data on welfare receipt are subject to substantial measurement error (i.e., misreporting of welfare benefit receipt), which may also bias state dependence estimates. This paper uses rich linked survey and administrative data to measure the effect of misreporting in the survey data on the estimated state dependence in welfare receipt in Germany. We find a rate of underreporting of welfare benefits of 8.6%. Recipients with relatively good labour market chances tend to underreport benefits more frequently. Overreporting benefits is less pronounced with a rate of 1.6%. Within the survey data, we observe more transitions into and out of the welfare system. However, our estimates of state dependence in welfare receipt based on a dynamic random effects model reveal that the effect of misreporting on estimated state dependence is small, even when we distinguish between working and non-working recipients in the model.

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Income Support Systems, Labor Market Policies and Labor Supply: The German Experience

Cited by 5 publications

References 37 publications

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Patterns of Welfare Dependence before and after a Reform: Evidence from First Generation Immigrants and Natives in Germany

Welfare receipt misreporting in survey data and its consequences for state dependence estimates: new insights from linked administrative and survey data

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