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Neighborhood effects on unemployment ? A test à la Altonji

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  • DUJARDIN, Claire

    (Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium)

  • GOFFETTE-NAGOT, Florence

    (Université de Lyon, F-69003 Lyon, France; CNRS, GATE, UMR 5824, Ecully, F-69130, France)

Abstract

The aim of this paper is to test for the influence of neighborhood deprivation on individual unemployment probability in the case of Lyon (France). We estimate a bivariate probit model of unemployment and location in a deprived neighborhood. Our identification strategy is twofold. First, we instrument neighborhood type by the gender composition of household’s children and the spouse’s workplace. Second, we use the methodology proposed by Altonji et al. (2005), that in our case consists in making hypotheses as to the correlation between the unobservables that determine unemployment and the unobservables that influence the selection into neighborhood types. Our results show that the effect of neighborhood deprivation is not significantly different from zero in the bivariate probit with exclusion restrictions. We also show that a correlation of the unobservables as low as ten percent of the correlation of observables is sufficient to explain the positive neighborhood effect that is observed when endogeneity is not accounted for.

Suggested Citation

  • DUJARDIN, Claire & GOFFETTE-NAGOT, Florence, 2009. "Neighborhood effects on unemployment ? A test à la Altonji," LIDAM Discussion Papers CORE 2009084, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2009084
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    Cited by:

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    2. Jensen, Paul H. & Palangkaraya, Alfons & Webster, Elizabeth, 2015. "Trust and the market for technology," Research Policy, Elsevier, vol. 44(2), pages 340-356.
    3. Leonardo Fabio Morales & Lina Cardona-Sosa, 2014. "The Influence of Neighborhood Characteristics on Wages and Labor Supply in an Urban Context: The Case of a Latin-American City," Borradores de Economia 844, Banco de la Republica de Colombia.
    4. Alivon, Fanny & Guillain, Rachel, 2018. "Urban segregation and unemployment: A case study of the urban area of Marseille – Aix-en-Provence (France)," Regional Science and Urban Economics, Elsevier, vol. 72(C), pages 143-155.
    5. Cardak, Buly A. & Vecci, Joe, 2013. "Catholic school effectiveness in Australia: A reassessment using selection on observed and unobserved variables," Economics of Education Review, Elsevier, vol. 37(C), pages 34-45.
    6. repec:zbw:rwirep:0285 is not listed on IDEAS
    7. Gundi Knies & Patricia C Melo & Min Zhang, 2021. "Neighbourhood deprivation, life satisfaction and earnings: Comparative analyses of neighbourhood effects at bespoke scales," Urban Studies, Urban Studies Journal Limited, vol. 58(13), pages 2640-2659, October.
    8. Haney, Timothy, 2012. "Off to Market: Neighborhood and Individual Employment Barriers for Women in 21st Century American Cities," SocArXiv 57e4a, Center for Open Science.
    9. Boje-Kovacs, Bence & Egsgaard-Pedersen, Aske & Weatherall, Cecilie D., 2021. "Residential mobility and persistent neighborhood deprivation," Journal of Housing Economics, Elsevier, vol. 53(C).
    10. Woutersen, Tiemen & Khandker, Shahidur R., 2014. "Estimating the long-run impact of microcredit programs on household income and net worth," Policy Research Working Paper Series 7040, The World Bank.
    11. Thomas K. Bauer & Michael Fertig & Matthias Vorell, 2011. "Neighborhood Eff ects and Individual Unemployment," Ruhr Economic Papers 0285, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    12. Rud, Iryna & Van Klaveren, Chris & Groot, Wim & Maassen van den Brink, Henriëtte, 2014. "The externalities of crime: The effect of criminal involvement of parents on the educational attainment of their children," Economics of Education Review, Elsevier, vol. 38(C), pages 89-103.
    13. Bechara, Peggy & Eilers, Lea & Paloyo, Alfredo R., 2015. "In Good Company – Neighborhood Quality and Female Employment," Ruhr Economic Papers 535, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    14. Lea Eilers & Alfredo R. Paloyo & Peggy Bechara, 2022. "The effect of peer employment and neighborhood characteristics on individual employment," Empirical Economics, Springer, vol. 62(4), pages 1885-1908, April.
    15. Leonardo Fabio Morales & Lina Cardona-Sosa, 2015. "Calidad de los vecindarios y oferta laboral femenina en un contexto urbano: un caso aplicado a la ciudad de Medellín," Borradores de Economia 12588, Banco de la Republica.
    16. Tanja Fendel, 2014. "Work-related Migration and Unemployment [Beschäftigungsmotivierte Umzüge und Arbeitslosigkeit]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 47(3), pages 233-243, September.
    17. Vincent Boitier, 2014. "Unemployment Dispersion and City Configurations: Beyond the Bid Rent Theory," Working Papers hal-00999559, HAL.
    18. repec:zbw:rwirep:0535 is not listed on IDEAS
    19. Peggy Bechara & Lea Eilers & Alfredo R. Paloyo, 2014. "In Good Company – Neighborhood Quality and Female Employment," Ruhr Economic Papers 0535, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    20. Thomas Horvath & Peter Huber, 2013. "The Impact of Networks, Segregation and Diversity on Migrants' Labour Market Integration. WWWforEurope Working Paper No. 22," WIFO Studies, WIFO, number 46883.
    21. Benoît Schmutz, 2015. "Spatial sorting of African Immigrants in the French Public Housing Market," The Review of Black Political Economy, Springer;National Economic Association, vol. 42(3), pages 247-270, September.

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    More about this item

    Keywords

    neighborhood effects; unemployment; simultaneous probit models; instrumental variables; selection on unobservables;
    All these keywords.

    JEL classification:

    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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