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Neighborhood Effects and Individual Unemployment

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  • Thomas K. Bauer
  • Michael Fertig
  • Matthias Vorell

Abstract

Using a unique dataset for Germany that links individual longitudinal data from the SOEP to regional data from the federal employment agency and data of real estate prices, we evaluate the impact of neighborhood unemployment on individual employment propects. The panel setup and richness of the data allows us to overcome some of the identification problems which are present in this strand of literature. The empirical results indicate that there is a significant negative impact of neighborhood unemployment on the individual employment probability.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.389020.de/diw_sp0409.pdf
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Bibliographic Info

Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 409.

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Length: 40 p.
Date of creation: 2011
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp409

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Keywords: Social interactions; unemployment; neighborhood characteristics;

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References

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  1. DUJARDIN, Claire & PEETERS, Dominique & THOMAS, Isabelle, . "Neighbourhood effects and endogeneity issues," CORE Discussion Papers RP -2173, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Patrick Bayer & Stephen Ross & Giorgio Topa, 2005. "Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes," NBER Working Papers 11019, National Bureau of Economic Research, Inc.
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  4. Patrick J. Bayer & Stephen L. Ross, 2010. "Identifying Individual and Group Effects in the Presence of Sorting: A Neighborhood Effects Application," Working Papers, Duke University, Department of Economics 10-50, Duke University, Department of Economics.
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  6. van der Klaauw, Bas & van Ours, Jan C., 2003. "From welfare to work: does the neighborhood matter?," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 957-985, May.
  7. Woittiez, I. & Kapteyn, A., 1997. "Social interactions and habit formation in a model of female labor supply," Discussion Paper, Tilburg University, Center for Economic Research 1997-41, Tilburg University, Center for Economic Research.
  8. Lindbeck, Assar & Nyberg, Sten & Weibull, Jörgen W., 1997. "Social Norms and Economic Incentives in the Welfare State," Working Paper Series, Research Institute of Industrial Economics 476, Research Institute of Industrial Economics.
  9. Esther Duflo & Emmanuel Saez, 2003. "The Role Of Information And Social Interactions In Retirement Plan Decisions: Evidence From A Randomized Experiment," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(3), pages 815-842, August.
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  11. Zimmerman, David J., 1999. "Peer Effects in Academic Outcomes: Evidence From a Natural Experiment," Williams Project on the Economics of Higher Education, Department of Economics, Williams College DP-52, Department of Economics, Williams College.
  12. Charles F. Manski, 2000. "Economic Analysis of Social Interactions," NBER Working Papers 7580, National Bureau of Economic Research, Inc.
  13. Manski, Charles F., 1993. "Dynamic choice in social settings : Learning from the experiences of others," Journal of Econometrics, Elsevier, Elsevier, vol. 58(1-2), pages 121-136, July.
  14. DUJARDIN, Claire & GOFFETTE-NAGOT, Florence, . "Neighborhood effects on unemployment? A test à la Altonji," CORE Discussion Papers RP -2262, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  15. John P. Haisken-DeNew & Markus H. Hahn, 2010. "PanelWhiz - Efficient Data Extraction of Complex Panel Data Sets: An Example Using the German SOEP," Data Documentation 53, DIW Berlin, German Institute for Economic Research.
  16. Hedström, Peter & Kolm, Ann-Sofie & Åberg, Yvonne, 2003. "Social Interactions and Unemployment," Working Paper Series, Uppsala University, Department of Economics 2003:18, Uppsala University, Department of Economics.
  17. Hilary Williamson Hoynes, 2000. "Local Labor Markets And Welfare Spells: Do Demand Conditions Matter?," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 351-368, August.
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  20. Durlauf,S.N., 2000. "A framework for the study of individual behavior and social interactions," Working papers, Wisconsin Madison - Social Systems 16, Wisconsin Madison - Social Systems.
  21. Jason M. Fletcher, 2010. "Social interactions and smoking: evidence using multiple student cohorts, instrumental variables, and school fixed effects," Health Economics, John Wiley & Sons, Ltd., vol. 19(4), pages 466-484.
  22. Krauth, Brian V., 2004. "A dynamic model of job networking and social influences on employment," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 28(6), pages 1185-1204, March.
  23. Bruce A. Weinberg & Patricia B. Reagan & Jeffrey J. Yankow, 2004. "Do Neighborhoods Affect Hours Worked? Evidence from Longitudinal Data," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 22(4), pages 891-924, October.
  24. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
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Cited by:
  1. Wolfgang Lechthaler & Dennis Snower, 2013. "Worker Identity, Employment Fluctuations and Stabilization Policy," CESifo Working Paper Series 4271, CESifo Group Munich.
  2. Neil T.N. Ferguson & Maren M. Michaelsen, 2013. "The Legacy of Conflict – Regional Deprivation and School Performance in Northern Ireland," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0419, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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