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Social Interactions and Labor Market Outcomes in Cities

Author

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  • Zenou, Yves

    () (Research Institute of Industrial Economics (IFN))

Abstract

We develop a model where information about jobs is essentially obtained through friends and relatives, i.e. strong and weak ties. Workers commute to a business center to work and to interact with other people. We find that housing prices increase with the level of social interactions in the city because information about jobs is transmitted more rapidly and, as a result, individuals are more likely to be employed and to be able to pay higher land rents. We also show that, under some conditions, workers using more their weak ties than strong ties to find a job receive a higher wage. We finally demonstrate that workers living far away from jobs pay lower housing prices but experience higher unemployment rates than those living close to jobs because they mainly rely on their strong ties to obtain information about jobs.

Suggested Citation

  • Zenou, Yves, 2008. "Social Interactions and Labor Market Outcomes in Cities," Working Paper Series 755, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0755
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    References listed on IDEAS

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    1. Edward L. Glaeser & Bruce Sacerdote & José A. Scheinkman, 1996. "Crime and Social Interactions," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 507-548.
    2. Harris Selod & Yves Zenou, 2006. "City Structure, Job Search and Labour Discrimination: Theory and Policy Implications," Economic Journal, Royal Economic Society, vol. 116(514), pages 1057-1087, October.
    3. Calvo-Armengol, Antoni & Verdier, Thierry & Zenou, Yves, 2007. "Strong and weak ties in employment and crime," Journal of Public Economics, Elsevier, pages 203-233.
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    Cited by:

    1. Gautier, Pieter A. & Zenou, Yves, 2010. "Car ownership and the labor market of ethnic minorities," Journal of Urban Economics, Elsevier, vol. 67(3), pages 392-403, May.
    2. 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.
    3. Feng, Hao & Lu, Ming, 2013. "School quality and housing prices: Empirical evidence from a natural experiment in Shanghai, China," Journal of Housing Economics, Elsevier, vol. 22(4), pages 291-307.
    4. Andersson, Fredrik & Burgess, Simon & Lane, Julia, 2009. "Do as the Neighbors Do: The Impact of Social Networks on Immigrant Employment," IZA Discussion Papers 4423, Institute for the Study of Labor (IZA).
    5. Weinhardt, Felix, 2014. "Social housing, neighborhood quality and student performance," Journal of Urban Economics, Elsevier, vol. 82(C), pages 12-31.
    6. Yannis M. Ioannides & Giorgio Topa, 2010. "Neighborhood Effects: Accomplishments And Looking Beyond Them," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 343-362.
    7. Fredrik Andersson & Simon Burgess & Julia Lane, 2014. "Do as the Neighbors Do: Examining the Effect of Residential Neighborhoods on Labor Market Outcomes," Journal of Labor Research, Springer, vol. 35(4), pages 373-392, December.

    More about this item

    Keywords

    Weak Ties; Labor Market; Social Networks; Land Rent;

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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