Scandinavian Working Papers in Economics

Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 2005:8: Ethnic enclaves and welfare cultures - quasi-experimental evidence

Olof Åslund () and Peter Fredriksson ()
Additional contact information
Olof Åslund: IFAU - Institute for Labour Market Policy Evaluation, Postal: Box 513, 751 20 Uppsala, Sweden
Peter Fredriksson: Nationalekonomiska institutionen, Postal: Stockholms universitet, Nationalekonomiska institutionen, 106 91 Stockholm

Abstract: We examine peer effects in welfare use among immigrants to Sweden by exploiting a governmental refugee placement policy. We distinguish between the quantity of contacts – the number of individuals of the same ethnicity – and the quality of contacts – welfare use among members of the ethnic group. OLS regressions suggest that both these factors are positively related to individual welfare use. Instrumental variables estimations yield the conclusion that only the quality of contacts matter. An increase of the fraction of the ethnic group on welfare by 10 percent raises the individual probability of welfare use by almost 7 percent.

Keywords: Ethnic enclaves; welfare use; immigrants

JEL-codes: I38; J15; J18

36 pages, February 7, 2005

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