The Effect of Social Benefit Reform on Educational Inequality

Abstract Cross-country research argues that the design of welfare states and social protection systems shapes intergenerational transmission inequality. Studies examine this relationship within a country are however lacking from literature. Based on quasi-experimental using difference-in-differences estimation data Socio-Economic Panel, I analyse whether educational disadvantage children long-term unemployment assistance recipients increased after changes to eligibility criteria, benefit levels, conditionality were introduced in Germany 2005. find differences probability enter academic secondary school track between parents receiving one year before transition not or benefits by 13 percentage points. In part, was driven introduction means-testing changed composition recipients. However, further decreases financial conditions these already disadvantaged families following reductions levels appear as main driver observed effect. Changes parental subjective wellbeing due stigma do seem play significant mediating role. The findings highlight important contribution policy mobility equality opportunity.