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Neighborhood Effects On Unemployment ? A Test ? La Altonji

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Executive Summary

This paper is to test for the influence of neighborhood deprivation on individual unemployment probability in the case of Lyon (France). The authors estimate a bivariate probit model of unemployment and location in a deprived neighborhood. The identification strategy is twofold. First, they instrument neighborhood type by the gender composition of household's children and the spouse's workplace. Second, they use the methodology proposed by Altonji et al. (2005) that in the case consists in making hypotheses as to the correlation between the unobservable that determine unemployment and the unobservable that influence the selection into neighborhood types.

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