Scandinavian Working Papers in Economics

Working Paper Series, Center for Labor Studies,
Uppsala University, Department of Economics

No 2012:2: Is welfare dependency inherited? Estimating the causal welfare transmission effects using Swedish sibling data

Karin Edmark () and Kajsa Hanspers ()
Additional contact information
Karin Edmark: Uppsala Center for Labor Studies, Postal: Department of Economics, Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Kajsa Hanspers: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden

Abstract: This study tests whether individuals who grow up with parents on welfare benefits are themselves more (or less) likely to be welfare recipients as young adults, compared to individuals who grow up in non-welfare households. We use the sibling difference method to identify causal effects separately from the effects of correlated factors. While a descriptive analysis reveals a fairly high positive intergenerational correlation, especially in the late teens and conditional on a large set of household level factors, the sibling analysis provides no support for a causal effect of parents’ welfare benefit receipt on children’s future welfare use.

Keywords: Welfare benefits; intergenerational mobility; sibling approach

JEL-codes: I30; J10

41 pages, January 2, 2012

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