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Network Effects And Welfare Cultures

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Author Info
Marianne Bertrand
Erzo F. P. Luttmer
Sendhil Mullainathan

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Abstract

We empirically examine the role of social networks in welfare participation using data on language spoken at home to better infer networks within an area. Our empirical strategy asks whether being surrounded by others who speak the same language increases welfare use more for those from high welfare-using language groups. This methodology allows us to include local area and language group fixed effects and to control for the direct effect of being surrounded by one's language group; these controls eliminate many of the problems in previous studies. The results strongly confirm the importance of networks in welfare participation. © 2000 the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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Article provided by MIT Press in its journal The Quarterly Journal of Economics.

Volume (Year): 115 (2000)
Issue (Month): 3 (August)
Pages: 1019-1055
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Handle: RePEc:tpr:qjecon:v:115:y:2000:i:3:p:1019-1055

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  19. Bulow, Jeremy & Klemperer, Paul, 1994. "Rational Frenzies and Crashes," Journal of Political Economy, University of Chicago Press, vol. 102(1), pages 1-23, February. [Downloadable!] (restricted)
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