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Family welfare cultures

Author: Gordon Boyack Dahl; Andreas Ravndal Kostol; Magne Mogstad; National Bureau of Economic Research.
Publisher: Cambridge, Mass. : National Bureau of Economic Research, 2013.
Series: Working paper series (National Bureau of Economic Research), no. 19237.
Edition/Format:   eBook : Document : EnglishView all editions and formats
Database:WorldCat
Summary:
Strong intergenerational correlations in various types of welfare use have fueled a long standing debate over whether welfare dependency in one generation causes welfare dependency in the next generation. Some claim a culture has developed in which welfare use reinforces itself through the family, because parents on welfare provide information about the program to their children, reduce the stigma of participation,  Read more...
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Material Type: Document, Internet resource
Document Type: Internet Resource, Computer File
All Authors / Contributors: Gordon Boyack Dahl; Andreas Ravndal Kostol; Magne Mogstad; National Bureau of Economic Research.
OCLC Number: 854433588
Notes: Title from http://www.nber.org/papers/19237 viewed July 26, 2013.
"July 2013."
Description: 1 online resource (35, [6] pages) : illustrations.
Series Title: Working paper series (National Bureau of Economic Research), no. 19237.
Responsibility: Gordon B. Dahl, Andreas Ravndal Kostol, Magne Mogstad.

Abstract:

Strong intergenerational correlations in various types of welfare use have fueled a long standing debate over whether welfare dependency in one generation causes welfare dependency in the next generation. Some claim a culture has developed in which welfare use reinforces itself through the family, because parents on welfare provide information about the program to their children, reduce the stigma of participation, or invest differentially in child development. 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 use. 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 use in one generation causes welfare use 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. Using our estimates, we simulate the total reduction in DI participation from a policy which makes the screening process more stringent; the intergenerational link amplifies the direct effect on parents at the margin of program entry, leading to long-run participation rates and program costs which are substantially lower than would otherwise be expected. The detailed nature of our data allows us to explore the mechanisms behind the causal intergenerational relationship; we find suggestive evidence against stigma and parental investments and in favor of children learning from a parent's experience with the DI program.

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