, Ann-Sofie Kolm
and Yvonne Åberg
Peter Hedström: Nuffield College, Oxford University
Ann-Sofie Kolm: Uppsala University and IFAU - Institute for Labour Market Policy Evaluation, Postal: P O Box 513, SE-751 20 Uppsala, Sweden
Yvonne Åberg: Department of Sociology, Stockholm University
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.
41 pages, November 10, 2003
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