Labor Supply and Matching Rates for Welfare Recipients: An Analysis using Neighborhood Characteristics

This paper investigates how in addition to personal characteristicstheneighborhood affects the individual transition rate from welfare to work.We use a unique administrative database on welfare recipients in Rotterdam,the second largest city of The Netherlands. We find that the exit rate towork of young Dutch welfare recipients is influenced by the neighborhoodunemployment rate. Other neighborhood characteristics such as the averagehousing price are not important. From this we conclude that for young Dutchwelfare recipients a high local unemployment rate has a negative spillovereffect on the transition from welfare to work.