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Abstract: We argue that social welfare programs are linked with the destruction of social capital, as measured by interpersonal trust in laboratory games. To test for this, we employ experimental data for representative samples of individuals in six Latin American capital cities (Bogota, Buenos Aires, Caracas, Lima, Montevideo, and San Jose). In fact, we find that participation in welfare programs damages trust, a result that is robust to the inclusion of individual risk measures and a broad array of controls. Whereas we argue that endogeneity is not a critical issue, we also control for it using an instrumental variables approach. Our findings also support the notion that low take up rates may be due to stigma linked to trust and social capital, rather than to transaction costs.