Network Effects and Welfare Cultures*

Abstract

We empirically examine the role of social networks in welfare participation using data on language spoken at home to better infer networks <it>within</it> 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 ofthe problems in previous studies. The results strongly confirm the importance of networks in welfare participation.