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Social Interactions in Unemployment

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  • Rafael Lalive

Abstract

This paper studies the relevance of social interactions among the unemployed. Identification is based on a salient and selective extension of the potential duration of unemployment benefits. If social interactions are important, this policy change affects entitled individuals not only directly, but also indirectly by altering the duration of unemployment in the reference group. Moreover, this spillover effect of the policy should also be observed in the non-entitled group. Results indicate that there are strong indirect effects on the entitled, strong positive spillovers on the non-entitled, and the social interactions are about as important as the direct effects of the policy change.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2003/wp-cesifo-2003-11/cesifo1_wp1077.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1077.

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Date of creation: 2003
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Handle: RePEc:ces:ceswps:_1077

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Keywords: social interactions; social multiplier; unemployment; quasi-experiment;

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References

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  1. Card, David & Levine, Phillip B., 2000. "Extended benefits and the duration of UI spells: evidence from the New Jersey extended benefit program," Journal of Public Economics, Elsevier, Elsevier, vol. 78(1-2), pages 107-138, October.
  2. Marianne Bertrand & Erzo F. P. Luttmer & Sendhil Mullainathan, 1999. "Network Effects and Welfare Cultures," Working Papers 9903, Harris School of Public Policy Studies, University of Chicago.
  3. George A. Akerlof, 1997. "Social Distance and Social Decisions," Econometrica, Econometric Society, Econometric Society, vol. 65(5), pages 1005-1028, September.
  4. Falk, Armin & Fischbacher, Urs, 2002. ""Crime" in the lab-detecting social interaction," European Economic Review, Elsevier, Elsevier, vol. 46(4-5), pages 859-869, May.
  5. Alois Stutzer & Rafael Lalive, . "The Role of Social Work Norms in Job Searching and Subjective Well-Being," IEW - Working Papers 051, Institute for Empirical Research in Economics - University of Zurich.
  6. Winter-Ebmer, Rudolf, 1996. "Potential Unemployment Benefit Duration and Spell Length: Lessons from a Quasi-experiment in Austria," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1534, C.E.P.R. Discussion Papers.
  7. Berg, G.J. van den, 1987. "Nonstationarity in job search theory," Research Memorandum, Tilburg University, Faculty of Economics and Business Administration 242, Tilburg University, Faculty of Economics and Business Administration.
  8. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, Econometric Society, vol. 48(4), pages 817-38, May.
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Cited by:
  1. Federico Cingano & Alfonso Rosolia, 2006. "People I Know: Workplace Networks and Job Search Outcomes," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 600, Bank of Italy, Economic Research and International Relations Area.
  2. Rafael Lalive & Alejandra Cattaneo, 2006. "Social Interactions and Schooling Decisions," CESifo Working Paper Series 1787, CESifo Group Munich.
  3. Stephen L. Ross, 2009. "Social Interactions within Cities: Neighborhood Environments and Peer Relationships," Working papers, University of Connecticut, Department of Economics 2009-31, University of Connecticut, Department of Economics.
  4. Piero Cipollone & Alfonso Rosolia, 2006. "Social Interactions in High School: Lessons from an Earthquake," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 596, Bank of Italy, Economic Research and International Relations Area.
  5. Yannis M. Ioannides & Giorgio Topa, 2009. "Neighborhood Effects: Accomplishments and Looking Beyond Them," Discussion Papers Series, Department of Economics, Tufts University, Department of Economics, Tufts University 0736, Department of Economics, Tufts University.
  6. Raj Chetty & Amy Finkelstein, 2012. "Social Insurance: Connecting Theory to Data," NBER Working Papers 18433, National Bureau of Economic Research, Inc.

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