HYI Working Paper Series: Zhou Fenghua

Selectivity, Welfare Stigma, and the Take-up of Social Welfare: How Do Chinese People Manage Welfare Stigma? (Sophie Fenghua Zhou, School of Management, Central China Normal University; HYI Grassroots Training Program Visiting Scholar 2010-11)

Abstract
Scholarship of welfare stigma agrees that the more selective the welfare policy is, the more stigmatizing it is.  Yet there are controversies about the impact of welfare stigma on the take-up of welfare benefits. Earlier studies hold that welfare stigma is a major deterrent factor of welfare take-up, whereas more recent studies from comparative perspectives produce more complex results. To what extent is this knowledge from the well-established welfare states explanatory to the fact of the developmental welfare states?

This paper, taking the highly selective social assistance program—the Minimum Livelihood Guarantee in China— as an example, explores the relationship between selectivity and welfare stigma, and its effect on the take-up of social assistance via questionnaire interviews and a unique data set compiled for this research.  Analysis shows that though there are multiple stringent selection mechanisms and stigmatizing official propaganda, average citizens do not perceive strong stigma. They do believe that welfare fraud is serious, and yet they don’t show strong resentment for the welfare claimants, as they don’t relate the transfer to their own wallets. More importantly, they attribute poverty and welfare receipt more to bad luck and slack labor market than to negative personal characteristics or misbehaviors. In addition, the public distrust of the official propaganda and the strategic behaviors of the grass-roots bureaucrats neutralize the stigmatizing effect.  Therefore, the statistical discrimination approach —one of the conventional theories of welfare stigma sources — is irrelevant in the context of China, while taxpayer resentment view and individual attribution theory have strong explanatory power.

Among all the deterrent factors of welfare participation, the significant ones are: the high guarantee threshold, substitution effect of the informal social assistance system, the limited coverage, and transaction cost of the participants (in descending order of importance). By contrast, welfare stigma has a relatively limited impact on welfare participation.  To promote the program’s effectiveness in poverty reduction, the state needs to lower the threshold of protection,  increase the program’s coverage, reduce the participation cost of the residents, and shoulder greater responsibility in the welfare system.

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