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Patterns of welfare-to-employment transitions of Croatian Guaranteed Minimum Benefit recipients: a preliminary study
Teo Matković* 
Preliminary communication | Year: 2017 | Pages: 335 - 358 | Volume: 41 | Issue: 3 Received: July 31, 2017 | Accepted: August 11, 2017 | Published online: September 15, 2017
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FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
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Source: Croatian Employment Service and Ministry of Social Welfare.
 Source: Authors, adapted from Fernandez et al. (2016).
Source: SocSkrb, calculation of the authors.
Outcome | % | GMB ceased - in employment | 22.3 | GMB ceased - household income other than employment | 4.3 | GMB ceased - employment of another household member | 13.5 | GMB ceased - not seeking job | 4.7 | GMB ceased - other (e.g. death, migration, prison…) | 8.6 | GMB recipient - disability | 0.4 | GMB recipient - in employment | 2.6 | Status unchanged as of May-2017 | 42.9 |
Source: SocSkrb, calculation of the authors.
Log-rank tests: (1) chi2(3)=3.67; (2) chi2(3)=8.38*; (3) chi2(3)=0.98; (4) chi2(3)=2.10. Source: SocSkrb, calculation of the authors.
Log-rank tests: (1) chi2(4)=17.46**; (2) chi2(4)=12.12*; (3) chi2(2)=5.37+; (4) chi2(1)=4.24*. Source: SocSkrb, calculation of the authors.
Log-rank tests: (Men): chi2(3)=12.09**; (Women): LR test chi2(3)=3.67. Source: SocSkrb, calculation of the authors.
Source: SocSkrb, calculation of the authors.
| Hypothetical PTR for all recipients, % (at 35% avg. wage) | Actual PTR, %
(for those who got employed) | Average wage, HRK
(for those who got employed | Single person household | 52 | 50 | 2.831 | Single parent household | 56 | 54 | 3.577 | Household with dependents | 61 | 58 | 3.029 | Household without dependants | 58 | 55 | 2.915 | Total | | 53 | 2.998 |
Source: SocSkrb, calculation of the authors.
Log-rank tests: (METR) chi2(1)=3.86*; Gender LR test chi2(1)=4.08*. Source: SocSkrb, Tax Administration, calculation of the authors.
Attribute | Individuals % (first episode) | Average PTR for min. wage | % Employed by Jun 2017 | Education | | | | No formal education | 19 | 55 | 12 | Compulsory education (ISCED 2) | 37 | 54 | 15 | Vocational education - 3yr (ISCED 3C) | 32 | 60 | 36 | Upper secondary education - 4yr (ISCED 3AB) | 11 | 62 | 9 | Professional tertiary education (ISCED5) | 1 | 71 | 34 | University education (ISCED 6) | 0 | | | Prior employment history | | | | No | 22 | 57 | 11 | Up to 1 year | 14 | 56 | 29 | 1-5 years | 29 | 58 | 18 | 5-10 years | 15 | 55 | 34 | More than 10 years | 20 | 58 | 17 | Unemployment duration (when starting GMB episode) | | | | Less than 6 months | 68 | 56 | 23 | 6-12 months | 6 | 64 | 8 | 1-3 years | 12 | 58 | 28 | 3 or more years | 7 | 57 | 13 | Not required or unknown | 7 | 57 | 0 | Age (as of 2016) | | | | 0-17 | 2 | 53 | 0 | 18-29 | 22 | 60 | 26 | 30-50 | 47 | 57 | 26 | 51-64 | 28 | 55 | 9 | Gender | | | | Male | 57 | 57 | 26 | Female | 43 | 57 | 14 | Received GMB prior to 2015 | 53 | 56 | 22 | Household type | | | | Single household | 34 | 52 | 18 | Single parent | 6 | 56 | 7 | Household with dependents | 42 | 61 | 24 | Household without dependants | 18 | 58 | 21 | Number of dependent children | | | | No | 52 | 54 | 19 | 1 | 19 | 60 | 21 | 2 | 16 | 65 | 21 | 3 or more | 13 | 55 | 24 | Child - nursery age (0-3) | 15 | 57 | 19 | Debt - account due to debt execution process | | | | Account not blocked | 43 | 57 | 23 | Account blocked - up to 2 min. wages | 15 | 58 | 23 | Account blocked - 2 to up to 12 min. wages | 28 | 58 | 15 | Account blocked - more than 12 min. wages | 14 | 55 | 20 | Estimated participation tax rate for taking up a minimum-wage job | | | | Less than 50% | 13 | 40 | 15 | 50-60% | 47 | 53 | 19 | 60-70% | 29 | 66 | 24 | More than 70% | 11 | 77 | 22 | Total household benefit level (including child benefit) | | | | Up to HRK 1.000 | 28 | 48 | 21 | HRK 1,160 to HRK 1,400 | 25 | 55 | 12 | HRK 1,560 to HRK 2,350 | 23 | 65 | 28 | HRK 2,390 to HRK 5,037 | 24 | 62 | 22 | Total | | 57 | 20 |
| Coeff | Std. Err | Barrier: lack of work-based capacities | | | Education (ref: No formal education) | | | Compulsory education (ISCED 2) | 0.046 | (0.525) | Vocational education - 3yr (ISCED 3C) | 1.053* | (0.497) | Upper secondary education - 4yr (ISCED 3AB) | 0.354 | (0.707) | Professional tertiary education (ISCED5) | 1.046 | (1.289) | Age (ref: 18-29) | | | 30-50 | -0.173 | (0.415) | 51-64 | -1.352 | (0.524) | Employment history (at least some tenure) | 1.097+ | (0.562) | Unemployed <12 months when started receiving GMB | 0.344 | (0.371) | Prior GMB recipient (received GMB prior to 2015 | 0.276 | (0.310) | Barrier: lack of incentives to work | | | Bank account blocked (debt greater than 2 minimum wages) | -0.419 | (0.305) | Total household benefit level (including child benefit) (per HRK 1,000) | -0.061 | (0.209) | Estimated PTR for taking up a minimum--wage job min (per %) | 0.007 | (0.014) | Barrier: in-household work and care | | | Gender: Female | -1.791** | (0.576) | Household configuration (ref: 2+ adults, with dependent members) | | | Single person household | -0.752 | (0.506) | Single parent household | 0.087 | (1.180) | Household without dependants | -0.612 | (0.731) | Interaction: gender and household configuration | | | Female*Single person household | 2.419** | (0.794) | Female*Single parent household | 0.627 | (1.404) | Female*Household without dependants | 2.235* | (0.999) | Female*Nursery-age child in household | -0.326 | (0.891) | Observations | 233 | | Individuals | 202 | | Events (employment) | 58 | | Log likelihood | -265.4 | |
Graph 1Number of unemployment benefits recipients and GMB recipients from 2003 to 2016 DISPLAY Graph
Graph 2Barriers to employment faced by GMB beneficiaries: schematic of theoretical mechanisms involved DISPLAY Graph
Graph 3Histogram of GMB-related benefits and social transfers including child benefits DISPLAY Graph
Graph 4Estimated participation tax rate for taking up a minimum-wage job DISPLAY Graph
Table 1Outcome of the unemployment episode of GMB recipients DISPLAY Table
Graph 5Kaplan-Meier failure function: exit into employment (recipient) DISPLAY Graph
Graph 6Kaplan-Meier failure function: transitions into employment (recipient), by disincentive for work criteria DISPLAY Graph
Graph 7Kaplan-Meier failure function: transitions into employment (recipient), by workrelated capabilities criteria DISPLAY Graph
Graph 8Kaplan-Meier failure functions: transitions into employment, by gender and household configuration DISPLAY Graph
Graph 9Wages and realized PTR for GMB recipients who made the transition to employment DISPLAY Graph
Table 2Hypothetical PTR, average realized PTR and wage of GMB recipients who made transition to employment, by household type DISPLAY Table
Graph 10Kaplan-Meier failure function: relapse from employment into GMB DISPLAY Graph
Graph 11Kaplan-Meier failure function: relapse from employment into GMB, by realized participation taxation rate and gender DISPLAY Graph
Table A1Attributes of individuals and households within the tracked population DISPLAY Table
Table A2Cox regression results: transitions of GMB recipients to employment DISPLAY Table
* The authors would like to thank to two anonymous referees for their valuable comments and suggestions.
1 Incidence of GMB is too rare to produce a subsample suitable for analysis, while survey design does not allow for precise identification of the group or timing of events/outcomes.
2 Income threshold for qualification since 2014 stands at about 30% of net minimum wage (HRK 800) for single households, and 37% of the minimum wage (HRK 960) for households with two adult persons. The latter is increased by a further 18% of the minimum wage (HRK 480) per additional adult member of the household and by 12% (HRK 320) for any minor dependents – up until the cap is reached (comprising about 6 to 8 household members). The amount is additionally increased by a further 4.5% of the minimum wage (HRK 120) per additional minor dependents if it is a single-parent household.
3 GMB is coupled with other benefits that use GMB as a prerequisite – such as free school textbooks, electricity grant fee which amounts HRK 200 introduced in September 2015, a grant for firewood, housing allowance or local government benefits (Šućur et al., 2016). These coupled benefits are not considered as income for the purpose of being qualified to receive GMB.
4 Grotti and Scherer assume positive partner effect of “additional resources”, but in the jobless households observed in this study there is no variation – as lack of financial, social and cultural resources in jobless households (Matković,  2006; Šućur, 2014) are likely to adversely affect all adult members of the household.
5 Centre for Social Welfare, Požega, located in a moderately underdeveloped region covers about 1% of population of Croatia. The region is one of the twelve counties within the lowest grouping of the national Development Index, and among the five with the lowest GDP/per capita – as it stands at about 60% of the national average. However, the share of GMB recipients in the population in 2015 (2.2%) was slightly lower than the national average of 2.4%.
6 GMB beneficiaries can have their beneficiary status changed due to employment but also due to personal non-compliance or non-working income generated by any other member of the household.
7 This number represents only a minority of the stock of the GMB recipients within the centre, which at the end of 2015 amounted to 728 active GMB with a total of 1,420 beneficiaries. There were 610 unemployed users most of them long-term beneficiaries.
8 Out of them, 9 (in 12 episodes) were not required to be registered as unemployed with the CES due to being older than 60 or having a child younger than one year – none of them got employed during the observation period, but were included in the analysis as they are still categorized as unemployed in the Social Welfare Act.
9 In all but ten cases those were minors, while other were persons unfit for work.
10 In most cases those were “empty nest” households with partners aged 50+, sometimes one grownup child.
11 Transitions into employment of long-term beneficiaries might be facilitated by the provision that they are eligible for staggered withdrawal of benefits after receiving GMB for a year or more.
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September, 2017
III/2017
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