The dynamics of welfare entry and exit among natives and immigrants

Christoph Wunder and Regina Riphahn

VfS Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis from Verein für Socialpolitik / German Economic Association

Abstract: This paper uses panel data from the German Socio-Economic Panel (SOEP) to analyze welfare entry and exit among natives and immigrants after a substantial reform of the welfare system (``Hartz reform''). Using results from dynamic multinomial logit models, we calculate transition matrices between three mutually exclusive labor market states (inactivity, employment, welfare receipt) for five groups: natives, all immigrants, EU citizens, non-EU citizens, and immigrants with German citizenship. The empirical results show that temporal persistence in welfare participation can for the most part be explained by observed and unobserved characteristics. In general, immigrants appear to have a higher risk of welfare entry and a lower probability of welfare exit compared to natives. We find no evidence of a failure of the welfare system in the sense that it creates a welfare trap. Instead, the immigrant-native gap in welfare dependence arises from an insufficient labor market integration and an increased risk of unemployment for immigrants. The analysis identifies non-EU citizens, who are mostly of Turkish origin or citizens of the successor states of former Yugoslavia, as a group with particularly poor labor market prospects: they have the lowest employment stability, the highest persistence in welfare participation, the highest welfare entry rate, and the lowest welfare exit rate.

Keywords: welfare trap; Hartz Reform; welfare dependence; unemployment benefit II; immigration (search for similar items in EconPapers)
JEL-codes: C23 I38 J61 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/49162/1/VfS_2011_pid_897.pdf (application/pdf)

Related works:
Journal Article: The dynamics of welfare entry and exit amongst natives and immigrants (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc11:49162

Access Statistics for this paper

More papers in VfS Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis from Verein für Socialpolitik / German Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().