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Local Social Capital and Geographical Mobility: Some Empirics and a Conjecture on the Nature of European Unemployment

  • David, Quentin

    ()

    (ECARES, Free University of Brussels)

  • Janiak, Alexandre

    ()

    (University of Chile)

  • Wasmer, Etienne

    ()

    (Sciences Po, Paris)

European labor markets are characterized by the low geographical mobility of workers. The absence of mobility is a factor behind high unemployment when jobless people prefer to remain in their home region rather than to go prospecting in more dynamic areas. In this paper, we attempt to understand the determinants of mobility by introducing the concept of local social capital. Using data from a European household panel (ECHP), we provide various measures of social capital, which appears to be a strong factor of immobility. It is also a fairly large factor of unemployment when social capital is clearly local, while other types of social capital are found to have a positive effect on employability. We also find evidence of the reciprocal causality, that is, individuals born in another region have accumulated less local social capital. Finally, observing that individuals in the South of Europe appear to accumulate more local social capital, while in Northern Europe they tend to invest in more general types of social capital, we argue that part of the European unemployment puzzle can be better understood thanks to the concept of local social capital.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3669.

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Length: 34 pages
Date of creation: Aug 2008
Date of revision:
Handle: RePEc:iza:izadps:dp3669
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  1. Kamhon Kan, 2006. "Residential Mobility and Social Capital," IEAS Working Paper : academic research 06-A005, Institute of Economics, Academia Sinica, Taipei, Taiwan.
  2. Quentin David & Alexandre Janiak & Etienne Wasmer, 2010. "Local social capital and geographical mobility," Sciences Po publications info:hdl:2441/5l6uh8ogmqi, Sciences Po.
  3. Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780198284345.
  4. Spilimbergo, Antonio & Ubeda, Luis, 2004. "A model of multiple equilibria in geographic labor mobility," Journal of Development Economics, Elsevier, vol. 73(1), pages 107-123, February.
  5. Bentolila, Samuel & Michelacci, Claudio & Suarez, Javier, 2004. "Social Contacts and Occupational Choice," CEPR Discussion Papers 4308, C.E.P.R. Discussion Papers.
  6. de Martí, Joan & Zenou, Yves, 2009. "Social Networks," IZA Discussion Papers 4621, Institute for the Study of Labor (IZA).
  7. Antonio Spilimbergo & Luis Ubeda, 2002. "Family Attachment and the Decision to Move by Race," IMF Working Papers 02/83, International Monetary Fund.
  8. Yann Algan & Pierre Cahuc, 2005. "The Roots of Low European Employment: Family Culture?," NBER Chapters, in: NBER International Seminar on Macroeconomics 2005, pages 65-109 National Bureau of Economic Research, Inc.
  9. repec:spo:wpecon:info:hdl:2441/8808 is not listed on IDEAS
  10. David, Quentin & Janiak, Alexandre & Wasmer, Etienne, 2008. "Local Social Capital and Geographical Mobility: A Theory," IZA Discussion Papers 3668, Institute for the Study of Labor (IZA).
  11. Edward L. Glaeser & David Laibson & Bruce Sacerdote, 2002. "An Economic Approach to Social Capital," Economic Journal, Royal Economic Society, vol. 112(483), pages 437-458, November.
  12. Giuseppe Bertola & Andrea Ichino, 1995. "Wage Inequality and Unemployment: United States versus Europe," NBER Chapters, in: NBER Macroeconomics Annual 1995, Volume 10, pages 13-66 National Bureau of Economic Research, Inc.
  13. Nickell, S. & Layard, R., 1997. "Labour Market Institutions and Economic Performance," Papers 23, Centre for Economic Performance & Institute of Economics.
  14. Matt Jackson, 2003. "The Effects of Social Networks on Employment and Inequality," Theory workshop papers 658612000000000032, UCLA Department of Economics.
  15. Cahuc, Pierre & Fontaine, Francois, 2002. "On the Efficiency of Job Search with Social Networks," IZA Discussion Papers 583, Institute for the Study of Labor (IZA).
  16. Montgomery, James D, 1991. "Social Networks and Labor-Market Outcomes: Toward an Economic Analysis," American Economic Review, American Economic Association, vol. 81(5), pages 1407-18, December.
  17. Belot, Michèle & Ermisch, John, 2006. "Friendship ties and geographical mobility: evidence from the BHPS," ISER Working Paper Series 2006-33, Institute for Social and Economic Research.
  18. repec:spo:wpecon:info:hdl:2441/8810 is not listed on IDEAS
  19. Calvo-Armengol, Antoni, 2004. "Job contact networks," Journal of Economic Theory, Elsevier, vol. 115(1), pages 191-206, March.
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