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Neighborhood effects on unemployment?: A test à la Altonji

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  • Dujardin, Claire
  • Goffette-Nagot, Florence

Abstract

This paper aims to test for the influence of neighborhood deprivation on individual unemployment probability, in Lyon (France). We estimate a bivariate probit model of unemployment and location in a deprived neighborhood. Our identification strategy is twofold. First, we instrument neighborhood type by spouse's workplace and gender of the children in the household. Second, we use the methodology proposed by Altonji et al. (2005), which in our case consists of hypothesizing about the correlation between the unobservables that determine unemployment and the unobservables that influence selection into neighborhood types. Our results show that the effect of neighborhood deprivation is not significantly different from zero in the bivariate probit with exclusion restrictions. We show also that correlation among the unobservables as low as 6% of the correlation of observables is sufficient to explain the positive neighborhood effect observed when endogeneity is not taken into account.

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  • Dujardin, Claire & Goffette-Nagot, Florence, 2010. "Neighborhood effects on unemployment?: A test à la Altonji," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 380-396, November.
  • Handle: RePEc:eee:regeco:v:40:y:2010:i:6:p:380-396
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    Cited by:

    1. Cardak, Buly A. & Vecci, Joe, 2013. "Catholic school effectiveness in Australia: A reassessment using selection on observed and unobserved variables," Economics of Education Review, Elsevier, vol. 37(C), pages 34-45.
    2. Rud, Iryna & Van Klaveren, Chris & Groot, Wim & Maassen van den Brink, Henriëtte, 2014. "The externalities of crime: The effect of criminal involvement of parents on the educational attainment of their children," Economics of Education Review, Elsevier, vol. 38(C), pages 89-103.
    3. repec:zbw:rwirep:0535 is not listed on IDEAS
    4. Thomas K. Bauer & Michael Fertig & Matthias Vorell, 2011. "Neighborhood Effects and Individual Unemployment," SOEPpapers on Multidisciplinary Panel Data Research 409, DIW Berlin, The German Socio-Economic Panel (SOEP).
    5. Leonardo Fabio Morales & Lina Cardona-Sosa, 2014. "The Influence of Neighborhood Characteristics on Wages and Labor Supply in an Urban Context: The Case of a Latin-American City," Borradores de Economia 844, Banco de la Republica de Colombia.
    6. Woutersen, Tiemen & Khandker, Shahidur R., 2014. "Estimating the long-run impact of microcredit programs on household income and net worth," Policy Research Working Paper Series 7040, The World Bank.
    7. Thomas K. Bauer & Michael Fertig & Matthias Vorell, 2011. "Neighborhood Eff ects and Individual Unemployment," Ruhr Economic Papers 0285, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    8. Thomas Horvath & Peter Huber, 2013. "The impact of networks, segregation and diversity on migrants' labour market integration," WWWforEurope Working Papers series 22, WWWforEurope.
    9. Benoît Schmutz, 2015. "Spatial sorting of African Immigrants in the French Public Housing Market," The Review of Black Political Economy, Springer;National Economic Association, vol. 42(3), pages 247-270, September.
    10. Bechara, Peggy & Eilers, Lea & Paloyo, Alfredo R., 2015. "In Good Company – Neighborhood Quality and Female Employment," Ruhr Economic Papers 535, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    11. Peggy Bechara & Lea Eilers & Alfredo R. Paloyo, 2014. "In Good Company – Neighborhood Quality and Female Employment," Ruhr Economic Papers 0535, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    12. Jensen, Paul H. & Palangkaraya, Alfons & Webster, Elizabeth, 2015. "Trust and the market for technology," Research Policy, Elsevier, vol. 44(2), pages 340-356.
    13. repec:zbw:rwirep:0285 is not listed on IDEAS
    14. Vincent Boitier, 2014. "Unemployment Dispersion and City Configurations: Beyond the Bid Rent Theory," Working Papers hal-00999559, HAL.

    More about this item

    Keywords

    Neighborhood effects Unemployment Simultaneous probit models Instrumental variables Selection on unobservables;

    JEL classification:

    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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