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Title: Stigma and Information in Welfare Participation

Citation Type: Working Paper

Publication Year: 2006

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Abstract: In this paper we identify social interactions in welfare participation. Since different social effects have different policy implications, we separately identify the contribution of stigma and information. Using US census data, we find that social interactions affect welfare participation decisions-in line with previous empirical studies-and that information is more important than stigma. This suggests that the large share of eligible nonparticipants may be due mainly to inferential problems in the process of social learning. We also find significant differences in these effects across races/ethnicities. White Americans appear to be stigmatized more by other White Americans than by other races. The opposite holds for the two minorities we consider, Black and Hispanic Americans. Our findings suggest that the presence of different "welfare cultures" is more likely due to information sharing and social learning than different attitudes toward work. We perform robustness tests to address problems of unobserved group effects, self-selection, and alternative identifying restrictions. Each broadly confirm this initial results.

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Authors: Zanella, Giulio; Cohen-Cole, Ethan

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Institution: University of Siena

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Publisher Location: Siena, Italy

Data Collections: IPUMS USA

Topics: Poverty and Welfare

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