Benefit receipt

The recent decline in registered unemployment to less than 3.4 millions in November 2007, however, can in part be explained by a positive economic environment with strong labour demand. Nevertheless, it is plausible to argue that more efficient placement and activation activities have also contributed to this development. There may be some motivation or threat effect of Hartz IV on the unemployed in the sense that the eventual transfer to means-tested and flat-rate UB II increases search intensity and reduces reservation wages during the receipt of UB I and later on. Some evidence from an employer survey points in this direction (Kettner and Rebien 2007). However, simulation studies show only marginal effects on labour supply (Amtz et al. 2007). At the same time, incentives to move from benefit receipt to work are still limited for long-term unemployed persons as are their chances on the labour market. 

On the other hand, recent data on the number of beneficiaries show that there is a divergent development of transfer receipt in UB I and UB II. While figures of UB I receipt, i.e. short-term unemployment, have declined, the number of UB II beneficiaries has increased considerably over the last 24 months. This means that the coverage of the unemployed by insurance benefits declines whereas reliance on basic income becomes more important. The relation is now approximately four fifths on UB II and one fifth on UB I (Fig. 4). If we restrict the comparison to registered unemployed persons, in November 2007 there were 650,000 in UB I and 2.37 million in UB II. 

basic income is of growing relevance regarding the structure of benefits in the German welfare state. Compared to unemployment insurance benefits, means-tested basic income is now the more important welfare scheme. However, recent figures also show some moderate decline in UB II. 

While the number of UB II beneficiaries increased strongly, data on individual benefit spells in 2005 show that there is considerable mobility in and out of UB II (Graf and Rudolph 2006 Graf 2007). About 74% of all households in need in January 2005 depended on benefits throughout the year while 26% were able to leave UB II. Households entering UB II later in 2005 had a higher chance of leaving basic income support within 12 months (43%). Continued benefit dependency over 12 months was most frequent with lone parents who could opt for an exemption from the job search requirement. 

Net benefits from Equivalent wages UB II + social allowance for 

---

Beecham and Knapp, 2001). This instrument gathers data on service utilization, household circumstances relevant to a costing study, employment patterns and experiences, caregiver input, and income and benefit receipts. Johnston et al (1999) oflFer an excellent review of cost assessments in healthcare evaluations more broadly. 

Activation does not necessarily imply benefit cuts or the introduction of new active labour market policy schemes, but crucial is the fact that benefit receipt is made more conditional upon job search activities, acceptance of available job offers or participation in active labour market policy schemes both in formal terms and actual implementation. First movers in the field of activation were the Anglo-Saxon welfare systems of the United States and the UK, followed by Denmark, the Netherlands, Switzerland and Germany. More recently, France and Sweden have been catching up. It thus seems fair to say that activation has now become a common orientation in labour market and social policies that not only spreads across countries but also covers more and more benefit schemes. 

On the macro level, the effect of activation policies is largely mediated through the labour market environment, but activation strategies are designed to lower unemployment or non-employment, raise overall employment and improve the fiscal balance of the welfare state at least in the long run. Hence, increasing labour market entry and participation is the major concern of activation policies, and for this purpose options of unconditional benefit receipt for the working-age population are to be closed. 

The first aspect implies more demand on individual behaviour in terms of mandatory job search obligations and potential sanctioning. Together with stricter availability criteria, this is expected to make benefit receipt less attractive, lower reservation wages and shorten unemployment duration. 

According to 144 SGB III benefit receipt could be suspended temporarily if a UB I recipient... 

RMA recipients are expected to perform part-time work of 20 or more hours per week. The RMA benefit supplements RMI and thus offers an enhanced financial incentive for the activation of this group of beneficiaries. In contrast to RMI, benefit receipt then becomes conditional upon the acceptance of employment. The payment of RMA is adjusted to the statutory minimum hourly wage salaire minimum interprofessionnel de croissance), with one part conforming to the RMI benefit and an additional part covered by the employer. The evolution of the recipients of various working-age MSs is shown in Tables 8 and 9. 

This new measure is meant to comprise individually tailored benefits aimed at returning unemployed persons to employment as swiftly as possible. All jobseekers who after 300 days of unemployment insurance benefit receipt have not qualified themselves for an additional insurance period by accepting a new job offer can be referred to the Job and Development Guarantee. Parents with a child under the age of 18 can choose whether they wish to take part in one of these measures or receive unemployment insurance benefits for another 150 days. Furthermore, anyone who has drawn some kind of unemployment insurance benefit for at least 18 months can be instructed to participate in Job and Development Guarantee programmes. During this time, participants are entitled to benefits pursuant to activity support. 

Table 42 presents national data for years since 1970 on four UI features benefit amounts, replacement rates, potential duration of benefit receipt, and actual observed duration of UI benefit receipt. 

Despite the federal 60 months life-time limit on TANF benefits, states may set shorter life-time limits and may choose to also impose intermittent time limits, which restrict welfare receipt to a certain maximum number of months in any given time frame. For example, Louisiana limits benefit receipt to a maximum of 24 months in any 5-year period, while the life-time limit is a total of 60 months benefit payments. 

The federal PRWORA law governing state spending of TANF grants also sets work requirements for recipients of cash assistance. After 24 months of benefit receipt, work is required to maintain TANF eligibility. States may choose to set tougher standards, and the minimum required hours per week varies across states. 

A benefit recipient gets feedback in the form of clear and fixed terms and conditions of the benefit receipt in advance - see for example the Personal Responsibility Agreement between TANF participants and the TANF agency and work, or activity, related incentives (such as the EITC, an income disregard, job retention services, transition benefits, and so on) making work pay. 

From an economic perspective both the compulsory and promoting elements of activation contribute to a strengthening of work incentives, return from employment relative to benefit receipt and - in the end - imply a behavioural change. In all countries, activation instruments such as integration contracts or activation programmes incorporate both demanding and enabling elements simultaneously. 

There is also a series of empirical studies that seek to identify the effects of compulsory and supportive elements of different kinds of activation programmes separately. Most of these studies examine the impact of search requirements, counselling, monitoring and sanctioning on the duration of unemployment benefit receipt. 

Van Berkel and Homemann Moller (2002) distinguish between three core dimensions of activation. Activation policies share the goal of ending benefit receipt. This is to be achieved through different elements which are present in all national activation strategies but with differing importance ... 

Activation policies are based on the principle of an appropriate balance of rights and duties, i.e. a work requirement, is introduced as a precondition for benefit receipt. Paternalistic activation approaches stressing this dimension are typically found in the continental European activation mainstream where potential negative work incentives stemming from more generous benefits are countered by strict work and job search requirements. 

---