Do supplementary jobs for welfare recipients increase the chance of welfare exit? Evidence from Germany

Welfare recipients in Germany are allowed to take up supplementary jobs while receiving welfare. In the present study, we use the German Panel Study “Labour Market and Social Security” (PASS) for the years 2006–2014 to analyze the impact of these supplementary jobs on the chances of welfare exit. Dynamic multinomial logit models controlling for unobserved heterogeneity and endogenous initial conditions reveal that full‐time employed men and women are more likely to exit welfare into employment than their non‐employed counterparts. For supplementary part‐time jobs, however, we find no or (only in some specifications for men) much smaller stepping stone effects.