Patterns of welfare-to-employment transitions of Croatian Guaranteed Minimum Benefit recipients: a preliminary study

Abstract

In this paper we explore the transitions of social assistance beneficiaries to employment in Croatia. Data was sourced from the social welfare register for 208 persons from the 2015 cohort of new, unemployed social assistance recipients in one Centre for Social Welfare, their outcomes tracked until June 2017. About a quarter of the recipients became employed within one year, in most cases with wages slightly higher than the statutory minimum. Out of them, about a quarter relapsed into social assistance status within a year. Following the World Bank Employment Barriers approach, we examine whether outcomes are associated with disincentives to work (inactivity trap), lack of work-related capabilities, or gendered engagement with in-household work. We found the average participation tax rate (PTR) for recipients to stand at 57%, yet no effect of PTR, benefit level, debt or PTR level on transition to employment was identified. With respect to capabilities, the role of human capital (vocational in particular), work experience and age turned out to be consistent with prior research. Substitution of inhouse work is consistent with the finding that women are less likely to get employed if living in a household with dependents.

Keywords

• welfare-to-employment transitions
• social assistance recipients
• participation tax rate
• employment barriers