Contacts with Benefits : How Social Networks Affect Benefit Receipt Dynamics in the Netherlands

Abstract

This study deals with two research questions: (1) To what extent do characteristics of social networks increase and/or decrease individuals’ likelihood of benefit receipt? (2) How do characteristics of social networks affect immigrants’ benefit receipt and income development after benefit receipt? Benefit receipt is understood as deriving one’s major source of income from benefits. By a social network, we mean the totality of individuals’ personal relationships, including the attributes of the people who make up this network. The study investigates these questions by drawing on both survey and administrative data from the Netherlands. Uniquely, the study also draws on a natural experimental setting among refugees. There are four empirical chapters that each shed a different light on the two research questions. In the first empirical chapter, we investigate the impact of social networks on the probability of receiving social benefits in the Netherlands. Two parts of people’s network are examined: The concentration of benefit recipients in the neighborhood, and access to social resources in the core network. The results indicate that access to social resources decrease the chance of benefit receipt, while benefit recipients in the neighborhood increase the chance of benefit receipt. In the second empirical chapter, we study to what extent individual’s access to social resources explains the native-immigrant differential in benefit receipt. Specifically, inter- and intra-ethnic social contact and the presence of benefit recipients in the neighborhood are examined. Immigrants are understood as first- and second-generation immigrants of Turkish, Moroccan, Surinamese and Antillean origin. We find that while high inter-ethnic contact lowers the likelihood of benefit receipt among people with an immigrant background, high intra-ethnic contact does not. Benefit receipt among native Dutch people is only affected by intra-ethnic relations. In explaining the differences between natives and immigrants in benefit receipt, however, only the concentration of benefit recipients in the social environment matters. In the third empirical chapter, we analyze the impact of the neighborhood context on the likelihood that refugees move from social assistance to paid employment. We consider the impact of the employment share and the median level of income among natives and co-ethnics. Our findings indicate that refugees are more likely to enter the labor market when the neighborhood’s employment share among co-ethnics and natives is higher. However, there is no evidence that the placement of refugees in an area with a higher median income among co-ethnics or natives facilitates the transition to work. In the final empirical chapter, we investigate the impact of the initial context for their income development among refugees who recently made the transition from social assistance benefits to work. Specifically, we focus on the impact of the initial context in which they were placed. We find that the characteristics of the initial context do not affect refugees’ initial income, nor their income growth. Hence, our analyses suggest that the first neighborhood has no impact on refugees’ subsequent labor incomes.