Institutional settings of social assistance: What is improved or unsolved by the

The last reform of benefits for long-term unemployed in Germany ("Hartz IV") did not reduce costs. Moreover, the number of recipients is much higher than it was expected before. Therefore, the institutional settings might be less effective than they could be. Initially, the paper describes the institutional changes by the "Hartz IV" reform. Afterwards, these changes are evaluated with respect to their effects on the number of recipients. The evaluation is based on the results of econometric studies concerning the former social assistance. It is pointed out that the reform improved basic conditions and incentives only partly, whereas some of its elements worsened the institutional settings.

11. September 2006

Authors Joachim Wilde

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