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

Kerstin Bruckmeier (), Katrin Hohmeyer () and Stefan Schwarz ()
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Kerstin Bruckmeier: Institute for Employment Research
Katrin Hohmeyer: Institute for Employment Research
Stefan Schwarz: Institute for Employment Research

Journal for Labour Market Research, 2018, vol. 52, issue 1, 1-21

Abstract: Abstract 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.

Keywords: Dynamic multinomial logit model; Misreporting; State dependence; Survey data; Welfare receipt (search for similar items in EconPapers)
JEL-codes: C81 I32 I38 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (11)

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DOI: 10.1186/s12651-018-0250-z

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