Intergenerational Transmission of Welfare Benefit Receipt: Evidence from Germany

Abstract

We study the intergenerational transmission of welfare receipt in Germany. We first describe the correlation of welfare receipt experienced in the parental household and subsequent own welfare receipt of young adults. In a second step, we investigate whether the observed correlations reflect causal effects using the Gottschalk (1996) approach and a family fixed effects estimation. We take advantage of the long running German Socio-Economic Panel Survey to contribute to a sparse literature. Our findings of strong positive correlations between parental and own welfare receipt confirm the international literature. However, these correlations do not hold up to controls for unobserved heterogeneities. This suggests that the patterns do not reflect the direct transmission of welfare receipt but instead the intergenerational correlation of relevant characteristics.