Scandinavian Working Papers in Economics
Working Papers,
Örebro University, School of Business
No 2012:1: Never give up? The persistence of welfare participation in Sweden
Daniela Andrén () and Thomas Andrén ()
Additional contact information
Daniela Andrén: Department of Business, Economics, Statistics and Informatics, Postal: Örebro University, Swedish Business School, SE - 701 82 ÖREBRO, Sweden
Thomas Andrén: National Institute of Economic Research and IZA
Abstract: Welfare persistence is estimated and compared between Swedish-born and foreign-born households during the 1990s. This is done within the framework of a dynamic discrete choice model controlling for the initial condition and permanent unobserved heterogeneity. We control for three types of persistence in terms of observed and unobserved heterogeneity, serial correlation, and structural state dependence, the focus being on the latter measure. The results show that state dependence in Swedish welfare participation was strong. This effect was three times as large for the foreign-born compared to Swedish-born, but when this effect is distributed over time, it disappears after three years for both groups. Contrary to previous studies, our results for foreignborn are that both country of origin and time in the country of destination have only small impacts on welfare participation.
Keywords: social assistance; welfare persistence; state dependence; unobserved heterogeneity; initial condition; dynamic probit model; GHK simulator
30 pages, May 9, 2012
Full text files
wp-1-2012.pdf
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