Arbeitslosengeld II: Arbeitsanreize und Verteilungsgerechtigkeit

Abstract

In order to analyze work incentives and distributive justice of the German Unemployment Benefit system (Arbeitslosengeld II (ALG II)) it is necessary to quantify the work effort and the value of commodities produced within a household for different family types. Since such variables are not directly observable, this study uses survey data based on a questionnaire. It is shown that ALG II suffers from two fundamental problems: first, work incentives for households with many children are very small; second, ALG II disadvantages multi-member households, in particular households with children. In order to cope with these two problems, ALG II should be modified in order to increase the living standard of families with children, and, at the same time, to lower the opportunity cost of entering the labor market. What seems suitable in this case is to offer free full-time day care and free meals for children of working parents.