We use cookies to provide you with the best possible website experience. This includes cookies that are necessary for the operation of the site, as well as cookies used for anonymous statistics, comfort settings, or displaying personalized content. You can decide which categories you want to allow. Please note that depending on your settings, some features of the website may not be available.

Cookie settings

These necessary cookies are required to enable the core functionality of the website. Opting out of these cookies is not possible.

cb-enable
This cookie stores the user's cookie consent status for the current domain. Expiry: 1 year.
laravel_session
Stores the session ID to recognize the user when the page reloads and to restore their login session. Expiry: 2 hours.
XSRF-TOKEN
Provides CSRF protection for forms. Expiry: 2 hours.
IZA Discussion Paper No. 8265
June 2014
Family Welfare Cultures

published in: Quarterly Journal of Economics, 2014, 129 (4), 1711-1752

Strong intergenerational correlations in various types of welfare use have fueled a long-standing debate over whether welfare receipt in one generation causes welfare participation in the next generation. Some claim a causal relationship in welfare receipt across generations has created a culture in which welfare use reinforces itself through the family. Others argue the determinants of poverty or poor health are correlated across generations, so that children's welfare participation is associated with, but not caused by, parental welfare receipt. However, there is little empirical evidence to sort out these claims. In this paper, we investigate the existence and importance of family welfare cultures in the context of Norway's disability insurance (DI) system. To overcome the challenge of correlated unobservables across generations, we take advantage of random assignment of judges to DI applicants whose cases are initially denied. Some appeal judges are systematically more lenient, which leads to random variation in the probability a parent will be allowed DI. Using this exogenous variation, we find strong evidence that welfare receipt in one generation causes welfare participation in the next generation: when a parent is allowed DI, their adult child's participation over the next five years increases by 6 percentage points. This effect grows over time, rising to 12 percentage points after ten years. While these findings are specific to our setting, they serve to highlight that welfare reforms can have long-lasting effects on program participation, since any original effect on the current generation could be reinforced by changing the participation behavior of their children as well. The detailed nature of our data allows us to compare the intergenerational transmission with spillover effects in other networks and to explore mechanisms. Our findings point to a special link between parents and their children, with little impact due to close neighbors' DI participation. We find suggestive evidence that what may change as a result of a parent being allowed DI is their children's beliefs about the efficacy of trying to get on to the DI program or their attitudes about DI participation and its stigma.

Communications
Mark Fallak
mark.fallak@liser.lu
+352 585-855-526
World of Labour
Olga Nottmeyer
olga.nottmeyer@liser.lu
+352 585-855-501
Network Coordination
Christina Gathmann
christina.gathmann@liser.lu

The IZA@LISER Network is a global community of scholars dedicated to excellence in labor economics and related fields, now coordinated at the Luxembourg Institute of Socio-Economic Research (LISER) following its transition from Bonn.

About IZA@LISER Network
Contact
IZA Network (Current Site Operator):

Luxembourg Institute of Socio-Economic Research (LISER)
11, Porte des Sciences
Maison des Sciences Humaines
L-4366 Esch-sur-Alzette / Belval, Luxembourg

IZA Institute (In Liquidation):

Forschungsinstitut zur Zukunft der Arbeit GmbH i. L.
Schaumburg-Lippe-Str. 5-9, 53113 Bonn. Germany
Phone: +49 228 3894-0 | Fax: +49 228 3894-510
E-Mail: info@iza.org | Web: www.iza.org
Represented by: Martin T. Clemens (Liquidator)