Persistence or transition: young adults and social benefits in Germany

Abstract

The paper examines the extent of social benefits receipt during the transition to adulthood in Germany in a longitudinal perspective. Temporal patterns of short term, lasting or recurrent benefits receipt and its influencing factors are observed in the context of school-to-work-transition and family formation. In addition, the study concerns the question if young adults are at risk to develop dependency in benefits receipt. Applying hazard rate models, the analysis examines the social benefits receipt of 1171 18- to 29-year-olds over a period of observation of three years. The analysis uses a combination of survey data and German administrative register data. The results show that young adults in Germany run a considerable risk for prolonged or repeated benefits receipt once they have claimed social benefits. Longer times of benefits receipt are coupled with long-term unemployment and low qualifications, but also young parents face high risks to remain on benefits receipt. The analysis demonstrates that living with a partner does not protect young benefits recipients against prolonged financial insecurity. However, there are no indications that young adults get used to benefits receipt and develop dependency in the period of observation.

Keywords:

• transition to adulthood
• benefits dynamics
• unemployment
• family formation
• hazard rate models

Notes

1. Further differentiations for employment are not considered due to restricted information on the working hours in the data and small case numbers of young people in minor employment.

2. According to previous research on income poverty (Aassve et al. 2006, Reinowski and Steiner 2006), young people's financial resources vary by household situation, with singles reporting the lowest income level (€733), and young people with family (€1386) or who are living with their parents (€1381) reporting the highest equivalent net income available. However, data are an approximation as young people will only partly have information of their parents' or partner's income.

3. The lowest certificate of education taken after five years of secondary education (German Hauptschulabschluss).

4. A general certificate of education taken after six years of secondary education (German Mittlere Reife).

5. Roughly equivalent to British ‘A’-Levels (German Abitur).

6. Compared with their share in the German population, young migrants are overrepresented in the group of young beneficiaries (Achatz et al. 2007). They face higher risks to receive benefits because of the higher unemployment rates among migrants in Germany. Furthermore young migrants more often live in large households facing particular high poverty risks (German Government 2008).