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Cover of: Spatial Variation in Incentives to Work and Hysteresis in Welfare
Kristof Dascher

Spatial Variation in Incentives to Work and Hysteresis in Welfare

Section: Articles
Volume 59 (2003) / Issue 4, pp. 529-550 (22)
Published 09.07.2018
DOI 10.1628/0015221032500829
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  • 10.1628/0015221032500829
Summary
This paper suggests a novel explanation of the steady rise in Germany's welfare recipient numbers. In the paper's model, there are disadvantaged households employed in a city with few amenities (a bad-amenity city) who would prefer to receive welfare in a city with many amenities (a good-amenity city). They can be kept out by the good-amenity city's local government – but only until a recession sets in. Then they do move from employment in the bad-amenity city into welfare in the good-amenity city. Hysteresis in welfare results.