Social interactions and unemployment

Peter Hedström, Ann-Sofie Kolm () and Yvonne Åberg
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Peter Hedström: Nuffield College, Oxford University
Yvonne Åberg: Department of Sociology, Stockholm University

No 2003:15, Working Paper Series from IFAU - Institute for Labour Market Policy Evaluation

Abstract: This paper is concerned with social interactions and their importance for unemployment. A theoretical model is specified in which the psychological costs of unemployment depend upon the unemployment level. The analysis reveals social multiplier effects, and shows that multiple unemployment equilibria may emerge. Data on all 20- to 24-year-olds living in Stockholm during the 1990s are used to test hypotheses from the model. The results show that individuals’ transition rates out of unemployment is strongly influenced by the unemployment level within their neighborhoods.

Keywords: Social interactions; social norms; social multipliers; unemployment (search for similar items in EconPapers)
JEL-codes: J64 Z13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ltv and nep-ure
Date: 2003-11-10
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Related works:
Working Paper: Social Interactions and Unemployment (2003)
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Persistent link: http://EconPapers.repec.org/RePEc:hhs:ifauwp:2003_015

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