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Social Interactions and Labour Market Outcomes in Cities Author info | Abstract | Publisher info | Download info | Related research | Statistics Zenou, Yves
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We develop a model where information about jobs is essentially obtained through friends and relatives, i.e. strong and weak ties. Workers commute to a business centre to work and to interact with other people. We find that housing prices increase with the level of social interactions in the city because information about jobs is transmitted more rapidly and, as a result, individuals are more likely to be employed and to be able to pay higher land rents. We extend this framework to incorporate black and white workers. Because whites obtain a higher wage than blacks, they reside closer to jobs to save on commuting time costs. As a result, black workers experience a higher unemployment rate than white workers because they have little contact with weak ties (especially whites) and thus have limited access to job information, relying mainly on their strong ties, who are themselves likely to be unemployed. The lack of ties that act as diverse sources of information is therefore the main cause of blacks' unemployment.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
6129.
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Date of creation: Feb 2007Date of revision:
Handle: RePEc:cpr:ceprdp:6129Contact details of provider: Postal: Centre for Economic Policy Research, 53--56 Great Sutton Street, London EC1V 0DG Phone: 44 - 20 - 7183 8801 Fax: 44 - 20 - 7183 8820
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Keywords: labour market ; land rent ; social networks ; spatial mismatch ; weak ties ; Other versions of this item:
Find related papers by JEL classification: A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities and Races; Non-labor Discrimination R14 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Land Use Patterns
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Gobillon, Laurent & Selod, Harris & Zenou, Yves, 2005.
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Harvard Institute of Economic Research Working Papers
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Bisin, A. & Verdier, T., 1999.
"Beyond the Melting Pot: Cultural Transmission, Marriage, and the Evolution of Ethnic and Religious Traits ,"
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1999-10, Laval - Laboratoire Econometrie.
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Other versions:
Selod, Harris & Zenou, Yves, 2004.
"City Structure, Job Search, and Labor Discrimination. Theory and Policy Implications ,"
Working Paper Series
620, Research Institute of Industrial Economics.
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CEPR Discussion Papers
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"Local Labor Markets, Job Matching, and Urban Location ,"
International Economic Review ,
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Other versions: Coralio Ballester & Antoni Calvó-Armengol & Yves Zenou, 2006.
"Who's Who in Networks. Wanted: The Key Player ,"
Econometrica ,
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Other versions: Calvo-Armengol, Antoni & Verdier, Thierry & Zenou, Yves, 2007.
"Strong and weak ties in employment and crime ,"
Journal of Public Economics ,
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Other versions: Brueckner, Jan K. & Largey, Ann G., 2008.
"Social interaction and urban sprawl ,"
Journal of Urban Economics ,
Elsevier, vol. 64(1), pages 18-34, July.
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Zenou, Yves, 2003.
"Efficiency Wages and Unemployment in Cities: The Case of High Relocation Costs ,"
CEPR Discussion Papers
4058, C.E.P.R. Discussion Papers.
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Other versions: George A. Akerlof, 1997.
"Social Distance and Social Decisions ,"
Econometrica ,
Econometric Society, vol. 65(5), pages 1005-1028, September.
Coulson, N Edward & Laing, Derek & Wang, Ping, 2001.
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Journal of Labor Economics ,
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Shapiro, Carl & Stiglitz, Joseph E, 1984.
"Equilibrium Unemployment as a Worker Discipline Device ,"
American Economic Review ,
American Economic Association, vol. 74(3), pages 433-44, June.
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Topa, Giorgio, 2001.
"Social Interactions, Local Spillovers and Unemployment ,"
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Other versions: Shihe Fu, 2005.
"What Has Been Capitalized into Property Values: Human Capital, Social Capital, or Cultural Capital? ,"
Working Papers
05-25, Center for Economic Studies, U.S. Census Bureau.
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Zenou, Yves, 2003.
"Urban Labour Economic Theory ,"
CEPR Discussion Papers
4029, C.E.P.R. Discussion Papers.
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Wasmer, Etienne & Zenou, Yves, 2002.
"Does City Structure Affect Job Search and Welfare? ,"
Journal of Urban Economics ,
Elsevier, vol. 51(3), pages 515-541, May.
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Neal, Derek, 2006.
"Why Has Black-White Skill Convergence Stopped? ,"
Handbook of the Economics of Education ,
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"The Effects of Social Networks on Employment and Inequality ,"
American Economic Review ,
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"Residential mobility and social capital ,"
Journal of Urban Economics ,
Elsevier, vol. 61(3), pages 436-457, May.
[Downloadable!] (restricted)
Robert W. Helsley & William C. Strange, 2007.
"Urban interactions and spatial structure ,"
Journal of Economic Geography ,
Oxford University Press, vol. 7(2), pages 119-138, March.
[Downloadable!] (restricted)
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