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Network Effects and Welfare Cultures

Marianne Bertrand, Erzo F. P. Luttmer and Sendhil Mullainathan
The Quarterly Journal of Economics
Vol. 115, No. 3 (Aug., 2000), pp. 1019-1055
Published by: Oxford University Press
Stable URL: http://www.jstor.org/stable/2586902
Page Count: 37
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Network Effects and Welfare Cultures
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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.

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