Working Paper: CEPR ID: DP1854
Authors: Simon Burgess; Stefan Profit
Abstract: We provide empirical evidence on the nature of spatial externalities in a matching model for Britain. We use a monthly panel of outflows, unemployment and vacancy stocks data from the registers at Job centres in Britain; these are mapped on to travel-to-work areas. We find evidence of significant spill-over effects that are generally in line with the predictions of theory. For example, we find that, conditional on local labour market conditions, high unemployment levels in neighbouring areas raise the number of local filled vacancies but lower the local outflow from unemployment.
Keywords: matching models; externalities; spatial dependence; unemployment; outflows
JEL Codes: E24; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| High unemployment levels in neighboring areas (J69) | Increase in local filled vacancies (J69) |
| High unemployment levels in neighboring areas (J69) | Decrease in local outflow from unemployment (J64) |
| High vacancy levels in neighboring areas (R23) | Increase in local outflow from unemployment (J65) |
| High vacancy levels in neighboring areas (R23) | Increase in outflow of filled vacancies (J63) |