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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. Samuel Bentolila & Claudio Michelacci & Javier Suarez, 2004. "Social Contacts And Occupational Choice," Working Papers wp2004_06, CEMFI.
  2. Yann Algan & Pierre Cahuc, 2005. "The Roots of Low European Employment : Family Culture?," Sciences Po publications 5169, Sciences Po.
  3. 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.
  4. Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780198284345, March.
  5. Nickell, Stephen & Layard, Richard, 1999. "Labor market institutions and economic performance," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 46, pages 3029-3084 Elsevier.
  6. de Martí, Joan & Zenou, Yves, 2009. "Social Networks," IZA Discussion Papers 4621, Institute for the Study of Labor (IZA).
  7. Kan, Kamhon, 2007. "Residential mobility and social capital," Journal of Urban Economics, Elsevier, vol. 61(3), pages 436-457, May.
  8. 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.
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  10. Antoni Calvó-Armengol & Matthew O. Jackson, 2004. "The Effects of Social Networks on Employment and Inequality," American Economic Review, American Economic Association, vol. 94(3), pages 426-454, June.
  11. 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.
  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. repec:spo:wpecon:info:hdl:2441/8808 is not listed on IDEAS
  14. 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).
  15. Quentin David & Alexandre Janiak & Etienne Wasmer, 2009. "Local social capital and geographical mobility," CREA Discussion Paper Series 09-11, Center for Research in Economic Analysis, University of Luxembourg.
  16. Spilimbergo, Antonio & Ubeda, Luis, 2004. "Family attachment and the decision to move by race," Journal of Urban Economics, Elsevier, vol. 55(3), pages 478-497, May.
  17. Calvo-Armengol, Antoni, 2004. "Job contact networks," Journal of Economic Theory, Elsevier, vol. 115(1), pages 191-206, March.
  18. Cahuc, Pierre & Fontaine, François, 2002. "On the Efficiency of Job Search with Social Networks," CEPR Discussion Papers 3511, C.E.P.R. Discussion Papers.
  19. 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.
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