Welfare stigma after take-up: Evidence from public cash transfers in Uruguay

Welfare stigma, i.e., the disutility coming from participating in social welfare programs per se, has been primarily studied by the economics literature as a determinant of incomplete take-up of social assistance policies, such as cash transfers. However, less is known about what happens to individuals’ feelings of stigma after they effectively take-up the benefits. This question remains under-explored so far, as impact evaluations of these programs have mainly focused on other subjective well-being outcomes rather than stigma itself. This study looks to address such gap by empirically analyzing the stigmatizing effects of Uruguay’s two largest non-contributory public cash transfer programs: Asignaciones Familiares - Plan de Equidad and Tarjeta Uruguay Social. The identification strategy employs a Regression Discontinuity Design (RDD) that exploits a vulnerability index which rules the assignment to each program. The data used in this study come from administrative records (2008–2010) and a detailed follow-up survey (2016–2018) that includes specific questions regarding shame and humiliation feelings in the context of poverty. The findings suggest that program participation increases self-reported feelings of shame and humiliation among beneficiaries between 0.34 and 0.67 SD, depending on the specification and on the program. These effects vary across both policies which might be explained by differences in institutional features between them. Taking welfare stigma effects into account can inform policy design and potentially improve the overall well-being of beneficiaries.