Investigation seeks to debunk the persistent belief of citizen's benefits: is employment more beneficial than receiving social assistance?
In a recent study conducted by the Economic and Social Science Institute (WSI) of the Hans-Böckler Foundation, it has been revealed that working full-time at the minimum wage results in significantly more money available than receiving citizen's income across Germany.
Dr. Eric Seils, a researcher at the WSI, calculated these values for all 400 German districts and cities. The study considered not only the net wage but also additional benefits such as housing benefit, child benefit, and child supplement, which low-income earners may receive.
The largest differences are evident where rents are low, with Nordhausen and the Saxon Vogtland district having a wage gap over 650 euros. In Munich and the surrounding area, the wage gap is around 400 euros more when working compared to receiving citizen's income. For single men, the difference is an average of 557 euros per month when working at the minimum wage compared to receiving citizen's income. However, for single parents with a child, the difference increases to 749 euros per month.
Critics of studies showing that working is less beneficial than citizen's income (Universal Basic Income, UBI) argue that UBI tends to reduce labor force participation significantly, leading to lower earned incomes and little improvement in important social outcomes such as education, health, or financial well-being.
Economists stress that while unconditional payments provide some financial relief, they do not incentivize work or productive investment of freed-up time, often resulting in increased leisure rather than entrepreneurship or caregiving.
Key arguments economists provide include labor market participation and reciprocity, substantial displacement of earned income, limited long-term social benefits, cost-effectiveness and policy alternatives, and the risk of reduced motivation to work.
Similar conclusions were reached by the employer-affiliated Institute of the German Economy as early as 2023. Despite these findings, the debate on the merits of citizen's income and Universal Basic Income continues, with proponents arguing for the potential to reduce poverty and increase social mobility.
In conclusion, the new study supports the economic benefits of working over citizen's income in Germany, as it fosters labor market participation, promotes human capital development, supports income growth, and avoids the adverse incentive effects and high public costs associated with universal unconditional payments.
Finances tend to be higher for individuals working full-time at the minimum wage compared to receiving citizen's income, especially in areas with lower rent like Nordhausen and the Saxon Vogtland district, where the wage gap exceeds 650 euros. Economists argue that while universal basic income (UBI) provides some financial relief, it often leads to reduced labor force participation and minimal improvement in social outcomes such as education, health, and financial well-being due to lack of incentives for work and productive investment.
