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Social Interactions and Unemployment

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Author Info

  • Hedström, Peter

    ()
    (Nuffield College)

  • Kolm, Ann-Sofie

    ()
    (Department of Economics)

  • Åberg, Yvonne

    ()
    (Department of Sociology)

Abstract

This paper is concerned with social interactions and their importance for unemployment. A theoretical model is specified in which the social and psychological costs of unemployment depend upon the unemployment level. The theoretical analysis reveals social multiplier effects, and shows that multiple unemployment equilibria may emerge. Data on all 20- to 24-year-olds living in the Stockholm metropolitan area during the 1990s are used to test key hypotheses derived from the model. The focus is on the role of neighborhood-based reference groups, and the results support the theoretical predictions: unemployment levels vary more across neighborhood-groups than what would be expected based on variation in observable characteristics, and individuals' transition rates out of unemployment appear to be strongly influenced by the unemployment level within their neighborhood-based reference groups.

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Bibliographic Info

Paper provided by Uppsala University, Department of Economics in its series Working Paper Series with number 2003:18.

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Length: 36 pages
Date of creation: 20 Jun 2003
Date of revision:
Handle: RePEc:hhs:uunewp:2003_018

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Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
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Web page: http://www.nek.uu.se/
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Keywords: Social interaction; social norms; social multipliers; unemployment;

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References

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Citations

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Cited by:
  1. Aronsson, Thomas & Blomquist, Sören, 2004. "Redistribution and Provision of Public Goods in an Economic Federation," Working Paper Series 2004:4, Uppsala University, Department of Economics.
  2. Österholm, Pär, 2004. "Estimating the Relationship between Age Structure and GDP in the OECD Using Panel Cointegration Methods," Working Paper Series 2004:13, Uppsala University, Department of Economics.
  3. Adrian Chadi, . "Employed But Still Unhappy? On the Relevance of the Social Work Norm," Working Papers 201142, Institute of Spatial and Housing Economics, Munster Universitary.
  4. Tolciu, Andreia, 2009. "What a difference peers can make: The impact of social (work) norms on unemployment duration," HWWI Research Papers 1-24, Hamburg Institute of International Economics (HWWI).
  5. Yannis M. Ioannides & Linda Datcher Loury, 2004. "Job Information Networks, Neighborhood Effects, and Inequality," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1056-1093, December.
  6. Andreia Tolciu, 2010. "The Economics of Social Interactions: An Interdisciplinary Ground for Social Scientists?," Forum for Social Economics, Springer, vol. 39(3), pages 223-242, October.
  7. Nordström Skans, Oskar, 2004. "Scarring effects of the first labour market experience: A sibling based analysis," Working Paper Series 2004:14, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  8. Hesselius, Patrik & Johansson, Per & Vikström, Johan, 2008. "Monitoring and norms in sickness insurance: empirical evidence from a natural experiment," Working Paper Series 2008:8, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  9. Dos Santos Ferreira, Rodolphe & Lloyd-Braga, Teresa & Modesto, Leonor, 2014. "Employment Dynamics and Redistributive Policies under Workers' Social Norms," IZA Discussion Papers 7888, Institute for the Study of Labor (IZA).
  10. Caria, Antonia Stefano & Hassen, Ibrahim Worku, 2013. "The formation of job referral networks: Experimental evidence from ubran Ethiopia:," IFPRI discussion papers 1282, International Food Policy Research Institute (IFPRI).
  11. Chadi, Adrian, 2011. "Employed but still unhappy? On the relevance of the social work norm," CAWM Discussion Papers 42, Center of Applied Economic Research Münster (CAWM), University of Münster.
  12. Bauer, Thomas K. & Fertig, Michael & Vorell, Matthias, 2011. "Neighborhood Effects and Individual Unemployment," IZA Discussion Papers 6040, Institute for the Study of Labor (IZA).
  13. Tolciu, Andreia, 2008. "Is unemployment a consequence of social interactions? Seeking for a common research framework for economists and other social scientists," HWWI Research Papers 1-15, Hamburg Institute of International Economics (HWWI).
  14. Joel van der Weele, 2007. "The Signalling Power of Sanctions in Collective Action Problems," Economics Working Papers ECO2007/10, European University Institute.
  15. Blomquist, Sören & Christiansen, Vidar, 2004. "Taxation and Heterogeneous Preferences," Working Paper Series 2004:9, Uppsala University, Department of Economics.
  16. Contini, Dalit & Richiardi, Matteo G., 2012. "Reconsidering the effect of welfare stigma on unemployment," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 229-244.

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