Networks or Neighborhoods? Correlations in the Use of Publicly-Funded Maternity Care in California

Abstract:     
This study focuses on 'network effects' in the utilization of publicly funded prenatal care using Vital Statistics data from California for 1989 to 2000. Networks are defined using 5-digit zipcodes and a woman's racial or ethnic group. Like others, we find evidence that the use of public programs is highly correlated within groups defined using race/ethnicity and neighborhoods. These correlations persist even when we control for many unobserved characteristics by including zipcode-year fixed effects, and when we focus on the interaction between own group behavior and measures of the potential for contacts with other members of the group ('contact availability'). However, the richness of our data allows us to go further and to conduct several tests of one hypothesis about networks: That the estimated effects represent information sharing within groups. The results cast doubt on the idea that the observed correlations can be interpreted as evidence of information sharing, and point instead to differences in the behavior of the institutions serving different groups of low-income women as the primary explanation for group-level differences in the take-up of this important public program.

JEL Classifications: I18, I38

Working Paper Series