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

  • Ethan Cohen-Cole

    ()

  • Giulio Zanella

    ()

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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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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  12. Jacob Alex Klerman & Caroline Danielson, 2004. "Why Did the Welfare Caseload Decline?," Working Papers 167, RAND Corporation Publications Department.
  13. Erzo F.P. Luttmer, 1999. "Group Loyalty and the Taste for Redistribution," Working Papers 9902, Harris School of Public Policy Studies, University of Chicago.
  14. Lindbeck, Assar & Nyberg, Sten & Weibull, Jörgen W., 1997. "Social Norms and Economic Incentives in the Welfare State," Working Paper Series 476, Research Institute of Industrial Economics.
  15. 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.
  16. Assar Lindbeck & Marten Palme & Mats Persson, 2008. "Social Interaction and Sickness Absence," CESifo Working Paper Series 2215, CESifo Group Munich.
  17. 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.
  18. 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.
  19. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December.
  20. Cohen-Cole, Ethan, 2006. "Multiple groups identification in the linear-in-means model," Economics Letters, Elsevier, vol. 92(2), pages 157-162, August.
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  23. Terra McKinnish, 2005. "Importing the Poor: Welfare Magnetism and Cross-Border Welfare Migration," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
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