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Social interactions and unemployment

Author

Listed:
  • Hedström, Peter

    (Nuffield College, Oxford University)

  • Kolm, Ann-Sofie

    (Uppsala University and IFAU - Institute for Labour Market Policy Evaluation)

  • Åberg, Yvonne

    (Department of Sociology, Stockholm University)

Abstract

This paper is concerned with social interactions and their importance for unemployment. A theoretical model is specified in which the psychological costs of unemployment depend upon the unemployment level. The analysis reveals social multiplier effects, and shows that multiple unemployment equilibria may emerge. Data on all 20- to 24-year-olds living in Stockholm during the 1990s are used to test hypotheses from the model. The results show that individuals’ transition rates out of unemployment is strongly influenced by the unemployment level within their neighborhoods.

Suggested Citation

  • Hedström, Peter & Kolm, Ann-Sofie & Åberg, Yvonne, 2003. "Social interactions and unemployment," Working Paper Series 2003:15, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    • Handle: RePEc:hhs:ifauwp:2003_015
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    References listed on IDEAS

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    More about this item

    Keywords

    Social interactions; social norms; social multipliers; unemployment;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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