Contacts with Benefits: How Social Networks Affect Benefit Receipt Dynamics in the Netherlands Marcus Haugen Kristiansen Contacts with Benefits How Social Networks Affect Benefit Receipt Dynamics in the Netherlands Marcus Haugen Kristiansen Manuscript Committee: Prof. dr. M. J. A. M. Verkuyten (Utrecht University) Prof. dr. F. A. van Tubergen (Utrecht University) Prof. dr. P. T. de Beer (Amsterdam University) Prof. dr. I. A. van Gaalen (Amsterdam University) Dr. E. M. Miltenburg (The Netherlands Institute for Social Research | SCP) Cover design: Oda Eikeland Mediel Ramsdal Printing: Ridderprint BV | www.ridderprint.nl ISBN: 978-94-6416-383-4 © 2021 Marcus Haugen Kristiansen All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage or retrieval system, without permission in writing from the author. The copyright of the articles that have been accepted for publication or that already have been published, has been transferred to the respective journals. Contacts with Benefits How Social Networks Affect Benefit Receipt Dynamics in the Netherlands Contacten met steun Hoe sociale netwerken uitkeringsdynamieken in Nederland beïnvloeden (met een samenvatting in het Nederlands) Proefschrift ter verkrijging van de graad van doctor aan de Universiteit Utrecht op gezag van de rector magnificus, prof.dr. H.R.B.M. Kummeling, ingevolge het besluit van het college voor promoties in het openbaar te verdedigen op vrijdag 22 januari 2021 des middags te 12.45 uur door Marcus Haugen Kristiansen geboren op 17 december 1991 te Oslo, Noorwegen Promotoren Prof. dr. J.C. Vrooman Prof. dr. W.A.F. Maas This research was funded by grant 2015-658 (Project ‘From network to work?’), awarded by Instituut Gak, an equity fund which subsidizes projects related to social security and the labor market within the Netherlands. Contents Synthesis 2 1.1 Introduction 3 1.2 Background and Research Questions 6 1.3 Benefit Receipt and the Dutch Welfare State 13 1.4 Research Design and Data 15 1.5 Overview of Empirical Chapters 23 1.6 Conclusions, Limitations and Implications 27 From Relationships to Receipt 36 Abstract 37 2.1 Introduction 38 2.2 Theory and Background 40 2.3 Data and Methods 44 2.4 Results 52 2.5 Discussion and Conclusions 60 2.6 Appendix 64 Social Benefits among Ethnic Majority and Minority Groups in the Netherlands 70 Abstract 71 3.1 Introduction 72 3.2 Theory and Background 74 3.3 Data and Methods 78 3.4 Results 83 3.5 Discussion and Conclusions 90 3.6 Appendix 93 Refugees and the Transition from Welfare to Work 102 Abstract 103 4.1 Introduction 104 4.2 Theory and Background 106 4.3 Data and Methods 112 4.4 Results 121 4.5 Discussion and Conclusions 128 4.6 Appendix 131 vi The Income Development of Working Refugees in the Netherlands 142 Abstract 143 5.1 Introduction 144 5.2 Theory and Background 146 5.3 Data and Methods 151 5.4 Results 157 5.5 Discussion and Conclusions 175 5.6 Appendix 178 Nederlandse Samenvatting 210 References 224 Acknowledgments 244 About the Author 248 ICS Dissertation Series 252 vii Chapter 1 1 Synthesis Chapter 1 Synthesis1 1This chapter has benefited greatly from discussions with Ineke Maas and Cok Vrooman. 2 Chapter 1 1.1 Introduction The welfare state and the social security it provides are key features of modern societies. In a narrow sense, it consists of various social insurance and tax-financed benefit schemes that aim to provide citizens with a minimum level of income and offer income security against risks such as job loss, illness, disability, and old-age. A broader perspective on the welfare state extends beyond mere income security, to also include prevention, reintegration, and social participation (see Vrooman 2009, 111–26). The broader perspective includes policy efforts that seek to prevent benefit dependency, and promote public health and participation in the labor market and society. From a public finance point of view, ensuring a high labor market participation and minimizing (long-term) reliance on social benefits is also important, because it increases tax rev- enues and minimizes public spending. In this dissertation, we focus on the receipt of benefits among the working-age population in the Netherlands, which includes social assistance, unemployment, and disability and sickness benefits. We also study exits from social assistance and the subsequent income development. In the Netherlands, about 2 percent received unemployment benefits, 4 percent received social assistance benefits, and 6 percent received disability benefits among 15 to 65 year-olds in 2018 (Statistics Netherlands 2020). It is natural that people for shorter and sometimes longer periods of time rely on social benefits, given that these aim to provide citizens with income security. This is, for instance, the case when a person experiences a job loss and cannot directly find new employment. The person would then need an alternative source of income – e.g. unemployment benefits – to maintain his or her standard of living or to get by while searching for a new job. Still, there is also quite some research indicating that benefit receipt is a recurrent phenomenon over the life course for some people. In the Neth- erlands, for instance, official statistics show that about 28 percent of people starting to receive social assistance in the first quarter of 2015 had also relied on this type of benefit in the previous year (Statistics Netherlands 2019c). There are also some studies indicating state or duration dependence in benefit receipt, meaning a higher chance to continue depending on benefits the longer a person has received benefits (Arranz and García-Serrano 2014; Mood 2013). Further, benefit receipt is to some degree transfer- able between parents and children (see Boschman et al. 2019). Additionally, research indicates that long-term benefit receipt is associated with worse health and mortality (Naper 2009), and there is an established association between low income in general and poor health (e.g. Lindahl 2005). All of these findings imply that benefit receipt can be problematic and have detrimental consequences for some individuals. It is therefore 3 Synthesis important to gain knowledge on the determinants of benefit receipt, including how to facilitate transitions from benefit receipt to the labor market. One issue that is often linked to contemporary discussions of the welfare state is rising (non-Western) immigration. In particular, immigrants’ lacking labor market integration in the form of lower rates of labor market participation and higher benefit dependency rates is seen as a key policy challenge. Across EU countries, particularly immigrants with a non-Western, or non-EU or -OECD background have a poorer labor market attachment than the native population (Eurostat 2020), although the differ- ences vary across countries and between different national-origin groups. The same is true for benefit receipt (Barrett and Maître 2013). In the Netherlands, people with a non-Western immigrant background more often receive a benefit than the native Dutch. To illustrate, take for example the receipt of social assistance benefits: almost 14 percent of 15 to 65 year-olds with a non-Western background received such benefits in 2015, whereas about 2 percent did so among the native Dutch (Statistics Netherlands 2016, 61). Within the broader view on the role of the welfare state, a key policy issue should therefore be how to reduce these differences for all residents thereby preventing benefit receipt and ensuring participation in work and employment. In this dissertation, we focus on the role social networks plays in benefit receipt, and in exits from social assistance and the subsequent income development. 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. There are several reasons why this focus is interesting. First, social networks are frequently mentioned as one explanation of benefit receipt, and persistent poverty and low income in particular, pointing to ‘deficiencies’ in or characteristics of people’s personal networks that lead to (long-term) benefit receipt. Wilson (2012) posited that lacking social contact with employed individuals explained persistent poverty among inner-city Blacks in the US. Along these lines, some argue that the concentration of benefit recipients in certain areas spurs higher dependence on benefit receipt and makes for ‘welfare cultures’ that are difficult for individuals to break out of – see Pinkster (2009) for a similar argument regarding low-income networks. Individuals are surrounded by other benefit recipients that in turn contribute to a larger distance to the labor market and more benefit receipt. A second reason relate to that having people in the network who are familiar with the welfare system may not necessarily be undesirable. People do not always claim benefits they are entitled to. This phenomenon is labeled non-take-up and several studies find evidence of it for various benefit programs (Bargain, Immervoll, and Viitamäki 2012; Hernanz, Malherbet, and Pellizzari 2004; Kayser and Frick 2000; Matsaganis, Levy, and 4 Chapter 1 Flevotomou 2010; Mood 2006; van Oorschot 1994). Lack of information and social stigma surrounding benefit receipt can partially explain this phenomenon, implying a potentially important role of social networks to remedy non-take-up. As such, indi- viduals’ social environments may contribute to the optimal usage of welfare rights. Last, social networks can improve individuals’ labor market outcomes (e.g. Flap and Völker 2013; Lin 1999). Individuals frequently turn to people in their surroundings for job leads, how to apply for jobs, and advice on dealing with issues in the workplace, such as difficulties with their managers or co-workers.