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Social Interactions in Unemployment

  • Lalive, Rafael

    ()

    (University of Lausanne)

This paper studies the relevance of social interactions among the unemployed. Identification is based on a salient and selective extension of the potential duration of unemployment benefits. If social interactions are important, this policy change affects entitled individuals not only directly, but also indirectly by altering the duration of unemployment in the reference group. Moreover, this spillover effect of the policy should also be observed in the non-entitled group. Results indicate that there are strong indirect effects on the entitled, strong positive spillovers on the non-entitled, and that social interactions are about as important as the direct effects of the policy change.

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File URL: http://ftp.iza.org/dp803.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 803.

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Length: 47 pages
Date of creation: Jun 2003
Date of revision:
Handle: RePEc:iza:izadps:dp803
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  1. Marianne Bertrand & Erzo F.P. Luttmer & Sendhil Mullainathan, 1999. "Network Effects and Welfare Cultures," JCPR Working Papers 62, Northwestern University/University of Chicago Joint Center for Poverty Research.
  2. van den Berg, Gerard J, 1990. "Nonstationarity in Job Search Theory," Review of Economic Studies, Wiley Blackwell, vol. 57(2), pages 255-77, April.
  3. George A. Akerlof, 1997. "Social Distance and Social Decisions," Econometrica, Econometric Society, vol. 65(5), pages 1005-1028, September.
  4. Alois Stutzer & Rafael Lalive, 2004. "The Role of Social Work Norms in Job Searching and Subjective Well-Being," Journal of the European Economic Association, MIT Press, vol. 2(4), pages 696-719, 06.
  5. Falk, Armin & Fischbacher, Urs, 2002. ""Crime" in the lab-detecting social interaction," European Economic Review, Elsevier, vol. 46(4-5), pages 859-869, May.
  6. Winter-Ebmer, Rudolf, 1996. "Potential Unemployment Benefit Duration and Spell Length: Lessons from a Quasi-experiment in Austria," CEPR Discussion Papers 1534, C.E.P.R. Discussion Papers.
  7. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  8. Card, David & Levine, Phillip B., 2000. "Extended benefits and the duration of UI spells: evidence from the New Jersey extended benefit program," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 107-138, October.
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