Ethnicity and the Intergenerational Transmission of Welfare Dependency

There exist sizeable differences in the incidence and duration of welfare spells across ethnic groups, and these differences tend to persist across generations. Using the National Longitudinal Surveys of Youth, we find that children raised in welfare households are themselves more likely to become welfare recipients for longer durations. We also show that growing up in an ethnic environment characterized by welfare dependency has a significant effect on both the incidence and duration of welfare spells. About 80 percent of the difference in welfare participation rates between two ethnic groups in the parental generation is transmitted to the children.