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How Family Transfers Crowd-out Social Assistance in Germany

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Abstract
The non-take-up of social assistance has been receiving increased attention among policy makers in recent years as it would apparently underpin the effectiveness of public intervention in alleviating poverty. We examine whether receipt of private transfers affects the household decision to take-up social assistance in Germany between 2009 and 2011. We exploit the follow-up of households in the SOEP to reconstruct family links and estimate a model of welfare participation with endogenous private transfers and sample selection of the instruments. We find that 20% of the non-take-up rate is due to monetary substitution of private transfers lowering the welfare program costs. However, we find that social assistance is more effective in alleviating poverty and its intensity than private transfers.

Suggested Citation

  • Edwin Fourrier-Nicolai, 2020. "How Family Transfers Crowd-out Social Assistance in Germany," AMSE Working Papers 2023, Aix-Marseille School of Economics, France.
    • Handle: RePEc:aim:wpaimx:2023
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    More about this item

    Keywords

    welfare participation; private transfers; family networks;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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