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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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    Cited by:

    1. Sofia Wixe, 2020. "Long-term neighbourhood effects on immigrant self-employment," Urban Studies, Urban Studies Journal Limited, vol. 57(13), pages 2733-2753, October.
    2. Sofia Wixe & Lars Pettersson, 2020. "Segregation and individual employment: a longitudinal study of neighborhood effects," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 64(1), pages 9-36, February.
    3. 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, February.
    4. 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.
    5. Johan Klaesson & Özge Öner, 2021. "Ethnic enclaves and segregation—self-employment and employment patterns among forced migrants," Small Business Economics, Springer, vol. 56(3), pages 985-1006, February.
    6. 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.
    7. 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.
    8. Andersson, Fredrik W. & Burgess, Simon & Lane, Julia, 2009. "Do as the Neighbors Do: The Impact of Social Networks on Immigrant Employment," IZA Discussion Papers 4423, Institute of Labor Economics (IZA).
    9. Weinhardt, Felix, 2014. "Social housing, neighborhood quality and student performance," Journal of Urban Economics, Elsevier, vol. 82(C), pages 12-31.
    10. 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.
    11. Öner, Özge & Klaesson, Johan, 2018. "Ethnic Enclaves and Labor Market Outcomes – What Matters Most: Neighborhood, City or Region?," Working Paper Series 1251, Research Institute of Industrial Economics.

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    Keywords

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    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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