Racial differences in the relationship between the receipt of informal financial support and social insurance

Abstract

In this paper, we examine the relationship between the reliance on informal financial support and social insurance programs such as unemployment insurance to meet financial hardships imposed during the economic downturn associated with COVID-19. We use the U.S. Census Bureau’s Household Pulse Survey to compare the likelihood of receiving informal financial support from family and friends for households that did or did not receive social insurance controlling for observable household characteristics. We pay special attention to differences by race/ethnicity and by homeownership – a proxy for wealth. Our results suggest that (1) some types of social insurance receipt are a weak substitute for informal financial support, (2) the substitution between informal financial support and social insurance receipt is stronger among White households than households of color, and (3) wealth is a more consistent buffer against financial hardship than social insurance receipt.