Means‐Tested Welfare Benefits and Subjective Well‐Being Through Time: Does Clients' Life Satisfaction Recover?

ABSTRACT We study the process of subjective well‐being adaptation to receiving welfare benefits. Using 15 waves of the German Panel Study Labour Market and Social Security and fixed‐effects regression models, we find that welfare benefit receipt decreases life satisfaction. Furthermore, on average, the results speak against the hypothesis of adaptation to receiving the benefit; the subjective well‐being of welfare benefit receipt starts poor and stays poor. On average, the life satisfaction of women with small children does not decrease upon receipt of welfare benefits.