Abstract

Children in families that collect social assistance grow up at disadvantage. Intergenerational transmission of poverty has gained massive attention, with “born poor, die poor” no longer being acceptable in affluent countries. Yet, we know little about how collecting social assistance affects children’s future labor market outcomes in Germany, partly because registry data has only recently become available. This study contributes to filling this research gap by analyzing young adults’ biographies who collected social assistance growing up using registry data. A serious issue we face is that family data on the counterparts of our subjects of study—young adults without social assistance experience as children—is not available. We solve this issue by applying family-specific fixed-effects. Assuming that siblings share aspects relevant for their labor market performance that are unobserved in the data, including genetic predisposition, neighborhood, and family’s social and cultural capital, this method can yield causal effects. We are interested in whether younger siblings (age 9-12) experience employment penalties worse than their older siblings (age 15-18) do from collecting social assistance. Our hypothesis is that younger siblings will experience greater penalties because they experienced social assistance collection at a more critical stage than their older siblings. We plan to measure the apprenticeship probability and employment probability of both younger and older siblings at age 21, although including employment quality measured at an older age is a possibility.