The welfare use of immigrants and natives in Germany: the case of Turkish immigrants

Purpose - This paper aims to analyze the welfare use of Turkish immigrants and natives in Germany. The authors ask whether the immigrant-native gap in welfare use can be explained by observable characteristics, whether the mechanisms behind welfare dependence differ for Turkish immigrants and natives, and, finally, they compare the situation before and after the 2005 reform of the German welfare system. Design/methodology/approach - Using data from the German Socio-Economic Panel Study, the authors estimate linear probability models with random effects to investigate the correlates of transfer receipt for Turkish immigrants and natives. Findings - Turkish immigrants have a higher propensity to use welfare benefits than natives. After controlling for general individual and household level characteristics, the difference in welfare receipt is statistically significant only for the group of second generation immigrants. The correlation of observable characteristics with welfare dependence differs significantly for the native and immigrant sample. The share of benefit recipients increased after the policy reform in 2005 for both immigrants and natives. Practical implications - First, as human capital and particularly labor market status are important determinants of welfare use, training programs designed for the special needs of immigrants might support their labor market integration. Second, measures to ameliorate the integration of older people into the labor market might be particularly useful because the need for welfare benefits arises particularly at the 50-60 age range. Originality/value - This is the first study to investigate welfare use of Turkish immigrants after the German 2005 labor market policy reform.