Do Neighborhoods Affect Hours Worked? Evidence from Longitudinal Data

Abstract

Researchers have argued that neighborhoods are an important determinant of labor activity. Using confidential street address data from the NLSY79, respondents were linked to neighborhood social characteristics and measures of job proximity. A one standard deviation increase in the social characteristics of a neighborhood increases annual hours by 6.1%; a similar increase in job proximity raises hours by 4.7%. Labor market activity at the individual level is positively related to labor market activity of neighbors. But employment is not the only neighborhood characteristic that matters. Being in a disadvantaged neighborhood, as measured by a variety of characteristics, reduces market work. Social interactions have non-linear effects with the greatest impact in the worst neighborhoods. Social interactions are also more important for less educated workers. Estimates that do not account for neighborhood selection on the basis of time-invariant and time-varying unobserved individual characteristics substantially overstate the social effects of neighborhoods but understate the effects of job access.

With a little help from my friends? Quality of social networks, job finding and job match quality

“…Studies on the use of informal search methods include Simon and Warner (1992), Pistaferri (1999), Marmaros and Sacerdote (2002), Loury (2006), Bentolila et al (2010) and Pellizzari (2010). 3 Studies defining networks indirectly using proxies include Topa (2001), Weinberg et al (2004), Bayer et al (2008), Hellerstein et al (2011) and Schmutte (2015), who use geographic proximity at the neighborhood level; Cingano and Rosolia (2012), who define networks at the firm level; Edin et al (2003), Munshi (2003) and Beaman (2012), who define networks based on immigrants' ethnic origin; and Dustmann et al (2011), who use information on both firms and ethnicity. 4 The approach we propose in this study combines elements from these two strands of the literature for the definition of the relevant network and network quality.…”

Identification of Social Interactions

“…One aspect of this problem is relatively simple and involves the choice of scale for a given measure of group; in the case of physical proximity, one finds the use of Zip codes in Corcoran, Gordon, Laren, and Solon (1992) and census tracts and blocks in Weinberg, Reagan, and Yankow (2004) to determine neighborhoods. In other cases, measurement problems involve the categories that define groups.…”

Hiring through referrals

“…The first two empirical observations are that a worker with better access to referrals (say, due to a larger network) is less likely to be unemployment and enjoys higher wages (Bayer, Ross and Topa (2008)) and that a worker's job-finding rate increases in the employment rate of his links (Topa (2001), Weinberg, Reagan and Yankow (2004), Cappellari and Tatsiramos (2010)). In the model, an unemployed worker's job finding rate increases in the number of workers that are linked with him as well as their employment rate, which is consistent with the above.…”