Welfare Participation in a Full Employment Economy: The Impact of Neighborhood

This paper employs original survey data on female single parents in Boston to examine the determinants of welfare participation. Particular attention is paid to the hypothesis—growing out of the literature on the urban underclass—that there are important neighborhood effects. The results provide support for the existence of neighborhood effects. These effects remain after controls for the personal characteristics of the respondents and for the possible endogenaity of neighborhood choice. The study also provides support for an explanation in which neighborhood effects are a result of the level of resources, particularly resources related to the percent of family heads who work. There is less support for the influence of stigma attached to welfare.