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This paper investigates whether individuals living in neighborhoods with high concentrations of unemployment are less likely to enter work if they are unemployed and more likely to lose their job if they are employed. The main challenge in the neighborhood effects literature is the identification of causal neighborhood effects. A particular problem is that individuals do not randomly select neighborhoods to live in: the selection process is often linked to the labor market situation and potential of individuals. To get more insight in neighborhood effects the authors run separate models for social renters and owner occupiers.
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