Spatial Variation in Incentives to Work and Hysteresis in Welfare

Kristof Dascher

FinanzArchiv: Public Finance Analysis, 2002, vol. 59, issue 4, 529-550

Abstract: This paper suggests a novel explanation of the steady rise in Germany's welfare recipient numbers. In the paper's model, there are disadvantaged households employed in a city with few amenities (a bad-amenity city) who would prefer to receive welfare in a city with many amenities (a good-amenity city). They can be kept out by the good-amenity city's local government but only until a recession sets in. Then they do move from employment in the bad-amenity city into welfare in the good-amenity city. Hysteresis in welfare results.

JEL-codes: E24 H53 I38 J61 R23 (search for similar items in EconPapers)
Date: 2002
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