Structural State Dependence in Social Assistance through the Lens of Couples' Ethnic Composition. Evidence from Swedish Panel Data

This study investigates whether couple ethnic composition shapes household welfare dependence, a relevant dimension overlooked in previous studies. Using fifteen years of Swedish panel data and a dynamic discrete-choice model that addresses initialconditions and unobserved heterogeneity, we analyze structural state dependence in social assistance across households of intra-ethnic and inter-ethnic couples. Consistent with previous studies, we find that thatwelfare participation is much higher for foreign-born individuals in both intra- and inter-ethnic couples than for couples of natives. However, the lowest structural state dependence in social assistance was found for households of inter-ethnic couples, while individuals from couples of natives show the strongest state dependence, nearly five times higher than for households of couples comprising foreign-born women with Swedish-born men and stable couples of foreign-born men and Swedish-born women. Our findings offer policy implications for addressing social assistance needs across diverse household types in increasingly multicultural and fiscally constrained societies. Therefore, policy efforts focused predominantly or exclusively on reducing immigrants' welfare dependency may be misguided, as households of natives can exhibit stronger structural state dependence despite lower overall participation rates.