Neighborhood effects on unemployment? A test à la Altonji

This paper aims to test for the influence of neighborhood deprivation on individual unemployment probability, in 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 spouse's workplace and gender of the children in the household. Second, we use the methodololy proposed by Altonji et al. (2005), which in our case consists of hypothesizing about the correlation between the unobservables that determine unemployment and the unobservables that influence 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 show also that correlation among the unobservables as low as 6% of the correlation of observables is sufficient to explain the positive neighborhood effect observed when endogeneity is not taken into account.

• metadata
• relations

Document type	Article de périodique (Journal article) – Article de recherche
Access type	Accès interdit
Publication date	2010
Language	Anglais
Journal information	"Regional Science and Urban Economics" - Vol. 40, no. 6, p. 380-396 (Novembre 2010)
Peer reviewed	yes
Publisher	Elsevier BV * North-Holland ((Netherlands) Amsterdam)
issn	0166-0462
Publication status	Publié
Affiliations	UCL - SSH/LIDAM/CORE - Center for operations research and econometrics UCL - EUEN/CORE - Center for operations research and econometrics Université de Lyon - Groupe d'Analyse et de Théorie Economiques
Keywords	Neighborhood effects ; Unemployment ; Simultaneous probit models ; Instrumental variables ; Selectio non unobservables
Links	http://hdl.handle.net/2078.1/69141[Handle] https://doi.org/10.1016/j.regsciurbeco.2010.05.001[DOI]

See also
	[boreal:29024]	Neighborhood effects on unemployment? A test à la Altonji