This study investigates state dependence in social assistance benet receipt in
Turkey where benet receipt and persistence rates have witnessed a signicant increase
since the last decade. Identication is achieved by dynamic random eects
probit models, controlling for unobserved heterogeneity and endogenous initial
conditions. Particularly, Wooldridge's (2005) estimator and its recent extensions
are applied for achieving consistent and correct estimates of state dependence.
In order to check for sensitivity of the results, Heckman's (1981) reduced form
approach is implemented. Both estimators enable us to deal with the potential
bias due to the short panel length. It is found that the benet receipt of the last
year increases the likelihood of benet receipt in the current year by 17 to 22
percentage points. The high level of state dependence in Turkey can be explained
by the ineciencies in the benet allocation system rather than the generosity
of the benets, as opposed to the welfare states.