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Welfare Stigma or Information Sharing? Decomposing Social Interactions Effects in Social Benefit Use

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  • Ethan Cohen-Cole

    ()

  • Giulio Zanella

    ()

Abstract

Empirical research has shown that social interactions affect the use of public benefits, thus providing evidence in favor of the idea of “welfare cultures.” In this paper we take the next crucial step by separately identifying the role of social stigma and information sharing in welfare participation, using Census data. We argue that the stigma vs. information distinction has possibly important consequences. Separate identification exploits the asymmetry between association and mere spatial proximity: we asume that while information is transmitted within groups, stigma works across groups as well. We also allow for heterogeneity of social effects across different race-ethnic groups and find non-trivial differences. We find that while the information channel is more important than stigma, White Americans appear to perceive stigma more from otherWhite Americans than by other races, and Black and Hispanic Americans appear to respond principally to stigma from external groups

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Bibliographic Info

Paper provided by Department of Economics, University of Siena in its series Department of Economics University of Siena with number 531.

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Date of creation: Mar 2008
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Handle: RePEc:usi:wpaper:531

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Keywords: social interactions; neighborhood effects; welfare stigma;

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References

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  1. Ethan Cohen-Cole & Giulio Zanella, 2008. "Unpacking Social Interactions," Economic Inquiry, Western Economic Association International, vol. 46(1), pages 19-24, 01.
  2. Aizer, Anna & Currie, Janet, 2004. "Networks or neighborhoods? Correlations in the use of publicly-funded maternity care in California," Journal of Public Economics, Elsevier, vol. 88(12), pages 2573-2585, December.
  3. Bramoullé, Yann & Djebbari, Habiba & Fortin, Bernard, 2009. "Identification of peer effects through social networks," Journal of Econometrics, Elsevier, vol. 150(1), pages 41-55, May.
  4. Assar Lindbeck & Sten Nyberg & Jšrgen W. Weibull, 1999. "Social Norms And Economic Incentives In The Welfare State," The Quarterly Journal of Economics, MIT Press, vol. 114(1), pages 1-35, February.
  5. Heckman, James J. & Smith, Jeffrey A., 2003. "The Determinants of Participation in a Social Program: Evidence from a Prototypical Job Training Program," IZA Discussion Papers 798, Institute for the Study of Labor (IZA).
  6. Beth Osborne Daponte & Seth Sanders & Lowell Taylor, 1999. "Why Do Low-Income Households not Use Food Stamps? Evidence from an Experiment," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 612-628.
  7. Lindbeck, Assar & Palme, Mårten & Persson, Mats, 2007. "Social Interaction and Sickness Absence," Working Paper Series 725, Research Institute of Industrial Economics.
  8. Charles F. Manski, 2004. "Social Learning from Private Experiences: The Dynamics of the Selection Problem," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 443-458.
  9. Terra McKinnish, 2005. "Importing the Poor: Welfare Magnetism and Cross-Border Welfare Migration," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
  10. William Brock & Steven N. Durlauf, 2000. "Interactions-Based Models," NBER Technical Working Papers 0258, National Bureau of Economic Research, Inc.
  11. Robert Moffitt, 2003. "The Role of Non-Financial Factors in Exit and Entry in the TANF Program," Economics Working Paper Archive 496, The Johns Hopkins University,Department of Economics.
  12. Rebecca M. Blank & Patricia Ruggles, 1996. "When Do Women Use Aid to Families with Dependent Children and Food Stamps? The Dynamics of Eligibility Versus Participation," Journal of Human Resources, University of Wisconsin Press, vol. 31(1), pages 57-89.
  13. Jacob Alex Klerman & Caroline Danielson, 2004. "Why Did the Welfare Caseload Decline?," Working Papers 167, RAND Corporation Publications Department.
  14. Charles F. Manski, 2000. "Economic Analysis of Social Interactions," NBER Working Papers 7580, National Bureau of Economic Research, Inc.
  15. Manski, C.F., 1990. "The Selection Problem," Working papers 90-12, Wisconsin Madison - Social Systems.
  16. Mari Rege & Kjetil Telle & Mark Votruba, 2007. "Social Interaction Effects in Disability Pension Participation. Evidence from Plant Downsizing," Discussion Papers 496, Research Department of Statistics Norway.
  17. Marianne Bertrand & Erzo F. P. Luttmer & Sendhil Mullainathan, 2000. "Network Effects And Welfare Cultures," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 1019-1055, August.
  18. Giulio Zanella, 2007. "Discrete Choice with Social Interactions and Endogenous Memberships," Journal of the European Economic Association, MIT Press, vol. 5(1), pages 122-153, 03.
  19. George A. Akerlof & Rachel E. Kranton, 2002. "Identity and Schooling: Some Lessons for the Economics of Education," Journal of Economic Literature, American Economic Association, vol. 40(4), pages 1167-1201, December.
  20. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December.
  21. Erzo F.P. Luttmer, 1999. "Group Loyalty and the Taste for Redistribution," JCPR Working Papers 61, Northwestern University/University of Chicago Joint Center for Poverty Research.
  22. Cohen-Cole, Ethan, 2006. "Multiple groups identification in the linear-in-means model," Economics Letters, Elsevier, vol. 92(2), pages 157-162, August.
  23. Iyer, S. & Weeks, M., 2004. "Multiple Social Interaction and Reproductive Externalities: An Investigation of Fertility Behaviour in Kenya," Cambridge Working Papers in Economics 0461, Faculty of Economics, University of Cambridge.
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Cited by:
  1. Stephen L. Ross, 2009. "Social Interactions within Cities: Neighborhood Environments and Peer Relationships," Working papers 2009-31, University of Connecticut, Department of Economics.
  2. Ethan Cohen-Cole & Burcu Duygan-Bump, 2008. "Household bankruptcy decision: the role of social stigma vs. information sharing," Risk and Policy Analysis Unit Working Paper QAU08-6, Federal Reserve Bank of Boston.
  3. repec:ese:iserwp:2012-12 is not listed on IDEAS
  4. Yannis M. Ioannides & Giorgio Topa, 2010. "Neighborhood Effects: Accomplishments And Looking Beyond Them," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 343-362.

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