The Transition from Welfare to Work and the Role of Potential Labor Income

It is often argued that the high level of welfare claims in Germany causes little incentive for workers with low productivity to seek for a job. We examine the influence of the ratio between estimated potential labor income and the welfare payment level on the probability of leaving social welfare. Using the GSOEP, we estimate a discrete time hazard rate model with competing risks and unobserved heterogeneity. Our results show that the ratio has a positive effect on the probability of leaving social welfare. This effect is especially relevant for households with a potential labor income higher than their welfare payment level.

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Year of publication:	2004
Authors:	Schneider, Hilmar ; Uhlendorff, Arne
Publisher:	Bonn : Institute for the Study of Labor (IZA)
Subject:	Sozialhilfe \| Erwerbstätigkeit \| Ökonomischer Anreiz \| Arbeitsangebot \| Deutschland \| social welfare \| labor supply \| duration analysis

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Series:	IZA Discussion paper series ; 1420
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	477611176 [GVK] hdl:10419/20718 [Handle]
Classification:	C41 - Duration Analysis ; J64 - Unemployment: Models, Duration, Incidence, and Job Search ; I38 - Government Policy; Provision and Effects of Welfare Programs
Source:	EconStor