What a Difference Peers Can Make: The Impact of Work Norms on Unemployment Duration - A Regional Approach

Abstract

Social interaction models, i.e. the changing sequence of actions between individuals who modify their behaviour under the influence of their peers, have rarely enjoyed as high a profile in economic analysis as they do today. This paper outlines a model of how social interactions among persons belonging to the same region might influence individual unemployment duration. The impact is assumed to be enhanced through social work norms shared by peers within the group. Building on a range of German data sets and derived from multilevel analysis, the results show that social interactions in terms of social work norms, in conjunction with socio-demographic and regional characteristics, have an effect on individual unemployment duration.