Income Support, (Un-)Employment and Well-Being

32 Pages Posted: 25 Aug 2016

See all articles by Clemens Hetschko

Clemens Hetschko

Free University of Berlin (FUB)

Ronnie Schöb

Freie Universitaet Berlin; CESifo (Center for Economic Studies and Ifo Institute)

Tobias Wolf

Free University of Berlin (FUB)

Date Written: July 2016

Abstract

Using specific panel data of German welfare benefit recipients, we investigate the non-pecuniary life satisfaction effects of in-work benefits. Our empirical strategy combines difference-in-difference designs with synthetic control groups to analyze transitions of workers between unemployment, regular employment and employment accompanied by welfare receipt. Working makes people generally better off than being unemployed, but employed welfare recipients do not reach the life satisfaction level of regular employees. This implies that welfare receipt entails non-compliance with the norm to make one’s own living. Our findings allow us to draw cautious conclusions on employment subsidies paid as welfare benefits.

Keywords: life satisfaction, subsidized employment, unemployment, income support, in-work benefits, social norms

JEL Classification: I310, I380, J600, J680

Suggested Citation

Hetschko, Clemens and Schöb, Ronnie and Wolf, Tobias, Income Support, (Un-)Employment and Well-Being (July 2016). CESifo Working Paper Series No. 6016. Available at SSRN: https://ssrn.com/abstract=2829260

Clemens Hetschko

Free University of Berlin (FUB) ( email )

Van't-Hoff-Str. 8
Berlin, Berlin 14195
Germany

Ronnie Schöb

Freie Universitaet Berlin ( email )

Boltzmannstraße 20
Berlin, Berlin 14195
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Tobias Wolf (Contact Author)

Free University of Berlin (FUB) ( email )

Van't-Hoff-Str. 8
Berlin, Berlin 14195
Germany

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