Information Shocks and the Take‐Up of Social Programs

The causes of participation in social programs have been studied extensively, with prominent roles found for program rules and benefits. A lack of information about these programs has been suggested as a cause of low participation rates among certain groups, but it is often difficult to distinguish between the role of information sharing and other features of a neighborhood, such as factors that are common to people of the same ethnicities or socioeconomic opportunities, or uniquely local methods of program implementation. We seek to gain new insight into the potential role of information flows by investigating what happens when information is disrupted. We exploit rich microdata from Florida vital records and program participation files to explore declines in Women, Infants, and Children (WIC) participation during pregnancy among foreign‐born Hispanics in the “information shock” period surrounding welfare reform. We identify how the size of these reductions is affected by having a high density of neighbors from the same place of origin. Specifically, we compare changes in WIC participation among Hispanic immigrants living in neighborhoods with a larger concentration of own‐origin immigrants to those with a smaller concentration of own‐origin immigrants, holding constant the size of the immigrant population and the share of immigrants in the neighborhood who are Hispanic. We find strong evidence that having a denser network of own‐origin immigrants mediated the information shock faced by immigrant women in the wake of welfare reform.