Submitted July 2007.
Cost Liability and Residential Space Heating Expenditures of Welfare Recipients in Germany*
Article first published online: 21 NOV 2008
© 2008 The Authors Journal compilation © Institute for Fiscal Studies, 2008
Volume 29, Issue 3, pages 329–345, September 2008
How to Cite
Rehdanz, K. and Stöwhase, S. (2008), Cost Liability and Residential Space Heating Expenditures of Welfare Recipients in Germany. Fiscal Studies, 29: 329–345. doi: 10.1111/j.1475-5890.2008.00077.x
The authors thank Jérôme Adda and an anonymous referee for helpful comments and suggestions.
- Issue published online: 21 NOV 2008
- Article first published online: 21 NOV 2008
- social welfare;
- space heating;
- economic incentives;
Within the German welfare system, recipients’ heating expenditures are generally fully covered by the government. This paper empirically tests the hypothesis that households receiving welfare payments turn to overconsumption of residential space heating. We use micro-data from two different data sources to explore whether the conditional heating expenditures of these households differ significantly from those of other households. Our empirical findings suggest that even when controlling for a range of other factors, this is indeed the case, as their heating expenditures lie about 7–8 per cent above those of other households. These results are fairly robust to sensitivity analyses. Comparing the results with those for a control group, expenditures for heating are still more than 5 per cent higher. Our results imply that there is potential scope for cost savings if this policy is changed.