Do Neighborhoods Affect Work Behavior? Evidence from the NLSY79

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%; a similar increase in job proximity raises hours by 4%. 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 more important for less educated workers and Hispanics. Job locations are more important for blacks. 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. Do Neighborhoods Affect Work Behavior? Evidence from the NLSY79 I.