Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6446
Based on administrative panel data from Norway, we examine how social insurance dependency spreads within neighborhoods, families, ethnic minorities, and among former schoolmates. We use a fixed effects methodology that accounts for endogenous group formation, contextual interactions, and time-constant as well as time-varying confounders. We report evidence that social insurance dependency is contagious. The estimated network effects are both quantitatively and statistically significant, and they rise rapidly with relational closeness in a way that establishes endogenous social interaction as a central causal mechanism. Social interactions do not cross ethnic borders.
social interaction social multiplier work norms peer effects