Social Interactions and Labour Market Outcomes in Cities

Yves Zenou

No 6129, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We develop a model where information about jobs is essentially obtained through friends and relatives, i.e. strong and weak ties. Workers commute to a business centre to work and to interact with other people. We find that housing prices increase with the level of social interactions in the city because information about jobs is transmitted more rapidly and, as a result, individuals are more likely to be employed and to be able to pay higher land rents. We extend this framework to incorporate black and white workers. Because whites obtain a higher wage than blacks, they reside closer to jobs to save on commuting time costs. As a result, black workers experience a higher unemployment rate than white workers because they have little contact with weak ties (especially whites) and thus have limited access to job information, relying mainly on their strong ties, who are themselves likely to be unemployed. The lack of ties that act as diverse sources of information is therefore the main cause of blacks' unemployment.

Keywords: Labour market; Land rent; Social Networks; Spatial mismatch; Weak ties (search for similar items in EconPapers)
JEL-codes: A14 J15 R14 (search for similar items in EconPapers)
Date: 2007-02
New Economics Papers: this item is included in nep-geo, nep-lab, nep-soc and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Social Interactions and Labor Market Outcomes in Cities (2008)
Working Paper: Social Interactions and Labor Market Outcomes in Cities (2008)
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