Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93372
Authors: 
Königs, Sebastian
Year of Publication: 
2014
Series/Report no.: 
IZA Discussion Paper 7977
Abstract: 
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.
Subjects: 
Germany
state dependence
welfare benefits
social assistance
Hartz reforms
JEL: 
I38
J60
J64
C23
Document Type: 
Working Paper

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