Do Supplementary Jobs for Welfare Recipients Increase the Chance of Welfare Exit? Evidence from Germany

Alexander Mosthaf (), Thorsten Schank and Stefan Schwarz ()
Additional contact information
Alexander Mosthaf: University of Mainz
Stefan Schwarz: Institute for Employment Research (IAB), Nuremberg

No 14268, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Welfare recipients in Germany are allowed to take up supplementary jobs while receiving welfare. The possibility of having a supplementary job was introduced to reduce welfare dependency and facilitate successful labor market integration. In the present study, we use the German Panel Study "Labour Market and Social Security" (PASS) for the years 2006-2014 to analyze the impact of supplementary jobs on the chances of welfare exit. Dynamic multinomial logit models controlling for unobserved heterogeneity and the problem of initial conditions reveal that (part- and full-time) employed males are more likely to exit welfare receipt into employment than their non-employed counterparts. This effect is not driven by household composition changes or earnings increases of household members. For women, however, we find only stepping stone effects for full-time supplementary jobs during welfare receipt. Women having a supplementary part-time job have an even lower probability of leaving welfare into full-time employment.

Keywords: dynamic panel data models; stepping stone effect; state dependence; labor market mobility; supplementary jobs (search for similar items in EconPapers)
JEL-codes: C33 I38 J60 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2021-04
New Economics Papers: this item is included in nep-eur and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Industrial Relations , 2024, 63 (3), 291-324

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Journal Article: Do supplementary jobs for welfare recipients increase the chance of welfare exit? Evidence from Germany (2024)
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