Loans for welfare benefit recipients: Evidence from the Sample of Integrated Welfare Benefit Biographies (SIG) 2007–2020

Abstract

The Sample of Integrated Welfare Benefit Biographies (SIG) provides comprehensive administrative data on the labour market participation, household composition and financial situation of welfare benefit recipients and their household members in Germany between 2007 and 2020. The SIG data enables research on the dynamics of welfare receipt and labour market participation of welfare recipients. The aim of the article is to introduce the SIG and to showcase its analytical potential by empirically examining benefit loans that can be granted by welfare agencies when unexpected expenses cannot be covered by welfare recipients themselves. Loans and detailed further financial information available can be used to assess the severity of financial restrictions during welfare receipt. We found that 2% of welfare recipients received loans at least once during their benefit episode and that loans were most likely to be granted right at the beginning of a benefit episode. Moreover, the likelihood of loans increased with higher benefit needs and when a parallel employment episode started.