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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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Suggested Citation

  • DUJARDIN, Claire & GOFFETTE-NAGOT, Florence, 2010. "Neighborhood effects on unemployment? A test à la Altonji," LIDAM Reprints CORE 2262, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2262
    DOI: 10.1016/j.regsciurbeco.2010.05.001
    Note: In : Regional Science and Urban Economics, 40(4), 380-396, 2010
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    Cited by:

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    4. Gundi Knies & Patricia C Melo & Min Zhang, 2021. "Neighbourhood deprivation, life satisfaction and earnings: Comparative analyses of neighbourhood effects at bespoke scales," Urban Studies, Urban Studies Journal Limited, vol. 58(13), pages 2640-2659, October.
    5. 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.
    6. 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.
    7. Leonardo Fabio Morales & Lina Marcela 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 12163, Banco de la Republica.
    8. Leonardo Fabio Morales & Lina Cardona-Sosa, 2015. "Calidad de los vecindarios y oferta laboral femenina en un contexto urbano: un caso aplicado a la ciudad de Medellín," Borradores de Economia 12588, Banco de la Republica.
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    10. 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.
    11. Thomas Horvath & Peter Huber, 2013. "The Impact of Networks, Segregation and Diversity on Migrants' Labour Market Integration. WWWforEurope Working Paper No. 22," WIFO Studies, WIFO, number 46883.
    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. Alivon, Fanny & Guillain, Rachel, 2018. "Urban segregation and unemployment: A case study of the urban area of Marseille – Aix-en-Provence (France)," Regional Science and Urban Economics, Elsevier, vol. 72(C), pages 143-155.
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    15. Haney, Timothy, 2012. "Off to Market: Neighborhood and Individual Employment Barriers for Women in 21st Century American Cities," SocArXiv 57e4a, Center for Open Science.
    16. 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.
    17. 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.
    18. Lea Eilers & Alfredo R. Paloyo & Peggy Bechara, 2022. "The effect of peer employment and neighborhood characteristics on individual employment," Empirical Economics, Springer, vol. 62(4), pages 1885-1908, April.
    19. Tanja Fendel, 2014. "Work-related Migration and Unemployment [Beschäftigungsmotivierte Umzüge und Arbeitslosigkeit]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 47(3), pages 233-243, September.
    20. Vincent Boitier, 2014. "Unemployment Dispersion and City Configurations: Beyond the Bid Rent Theory," Working Papers hal-00999559, HAL.
    21. 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.

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    More about this item

    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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