The dynamics of welfare entry and exit amongst natives and immigrants

Christoph Wunder and Regina Riphahn

Oxford Economic Papers, 2014, vol. 66, issue 2, 580-604

Abstract: This article studies welfare entry and exit in Germany and determines the relevance of state dependence for natives and immigrants. Based on dynamic multinomial logit estimations, we calculate transition matrices between three labour market states. We find that temporal persistence in welfare participation can mostly be explained by observed and unobserved characteristics. Immigrants appear to have a higher risk of welfare entry and a lower probability of welfare exit compared to natives. The results do not yield strong evidence of state dependence or of an overall welfare trap.

Date: 2014
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Working Paper: The dynamics of welfare entry and exit among natives and immigrants (2011)
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