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Neighborhood effects of high unemployment rates: Welfare implications among different social groups

  • Schwarz, Peter
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    This study analyzes spillover effects of high unemployment rates on well-being using cross-sectional data for Germany. Context effects among the employed arise due to the informational character of high unemployment rates. Using data on job security perceptions as well as regional unemployment rates the paper shows that high unemployment rates cause negative externalities among the employed. In addition, subjective perceptions of job security depend on local labor market conditions indicating the informational value of employment data. For unemployed persons we cannot find any welfare gains owing to a social norm effect. Thus, the existence of a public bad is not more enjoyable the more people suffer from the public bad.

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    File URL: http://www.sciencedirect.com/science/article/pii/S1053535711001582
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    Article provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).

    Volume (Year): 41 (2012)
    Issue (Month): 2 ()
    Pages: 180-188

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    Handle: RePEc:eee:soceco:v:41:y:2012:i:2:p:180-188
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620175

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