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Investigating neighbourhood effects in welfare-to-work transitions

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  • Vincent Dautel
  • Alessio Fusco

Abstract

We analyse the existence and underlying mechanisms of neighbourhood effects in welfare-to-work transitions. The analysis is based on Luxembourg social security longitudinal data, which covers the period 2001-2015 and provides precise information at the postcode level, corresponding mostly to streets. Our identification strategy exploits plausible exogenous variations among neighbours provided by the thinness of the housing market once controlling for residential sorting. We first examine interactions among all neighbours using an individual-level analysis, before focusing on interactions among only welfare recipients using a matched-pair analysis. This second step allows us to deal with the mediating effect of welfare recipients' citizenship. The main findings highlight the existence of neighbourhood effects in welfare-to-work transitions, which are also affected by the characteristics of the neighbours, including their citizenship. These characteristics suggest that social norms and/or stigma prevail in welfare-to-work transitions over the support for welfare recipients to find a job, but not over the in-group support for welfare recipients. The matched-pair analysis provides contrasting results across citizenship for individuals from large-sized citizenship groups (interactions within the own group) and individuals from medium-sized groups (interactions between groups).

Suggested Citation

  • Vincent Dautel & Alessio Fusco, 2021. "Investigating neighbourhood effects in welfare-to-work transitions," LISER Working Paper Series 2021-05, Luxembourg Institute of Socio-Economic Research (LISER).
    • Handle: RePEc:irs:cepswp:2021-05
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    More about this item

    Keywords

    welfare-to-work transitions; neighbourhood effects; diversity; block-level data;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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