Regional development of employed persons receiving Unemployment Benefit II in Germany. An analysis of convergence across federal states

Abstract

As a result of the last major reform of the German social security system, not only long-term unemployed but also employed persons are entitled to a new benefit – called Unemployment Benefit II – if the total income is below a legally binding subsistence level. For a few years, almost every third employable recipient of this means-tested benefit has actually been an employed person. Adding a regional analysis of recent developments to the existing literature, this paper concludes that German federal states generally drift apart regarding employed recipients of Unemployment Benefit II. One possible explanation is a potentially higher social acceptance of low paid jobs in federal states with higher shares of employed persons receiving Unemployment Benefit II.