Network effects and welfare cultures

We empirically examine the role of social networks in welfare participation using data on language spoken at home to better infer networks within an a rea. Our empirical strategy asks whether being surrounded by others who spe ak the same language increases welfare use more for those from high welfare -using language groups. This methodology allows us to include local area an d language group fixed effects and to control for the direct effect of bein g surrounded by one's language group; these controls eliminate many of the problems in previous studies. The results strongly confirm the importance o f networks in welfare participation.