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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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  3. Thomas J. Nechyba, 1999. "Social Approval, Values, and AFDC: A Re-Examination of the Illegitimacy Debate," NBER Working Papers 7240, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Borjas, George J, 1992. "Ethnic Capital and Intergenerational Mobility," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 123-50, February. [Downloadable!] (restricted)
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  5. Banerjee, Abhijit V, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 797-817, August. [Downloadable!] (restricted)
  6. Ellison, Glenn & Fudenberg, Drew, 1995. "Word-of-Mouth Communication and Social Learning," The Quarterly Journal of Economics, MIT Press, vol. 110(1), pages 93-125, February. [Downloadable!] (restricted)
  7. Evans, William N & Oates, Wallace E & Schwab, Robert M, 1992. "Measuring Peer Group Effects: A Study of Teenage Behavior," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 966-91, October. [Downloadable!] (restricted)
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  9. Benabou, Roland, 1996. "Heterogeneity, Stratification, and Growth: Macroeconomic Implications of Community Structure and School Finance," American Economic Review, American Economic Association, vol. 86(3), pages 584-609, June. [Downloadable!] (restricted)
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  11. 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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  12. George J. Borjas, 1994. "Long-Run Convergence of Ethnic Skill Differentials," NBER Working Papers 4641, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  13. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October. [Downloadable!] (restricted)
  14. George J. Borjas, 1994. "Long-run convergence of ethnic skill differentials: The children and grandchildren of the Great Migration," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 47(4), pages 553-573, July.
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  16. Besley, Timothy & Coate, Stephen, 1992. "Understanding welfare stigma: Taxpayer resentment and statistical discrimination," Journal of Public Economics, Elsevier, vol. 48(2), pages 165-183, July. [Downloadable!] (restricted)
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  17. Edward P. Lazear, 1995. "Culture and Language," NBER Working Papers 5249, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  18. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December. [Downloadable!] (restricted)
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