Neighborhood Effects, Public Housing and Unemployment in France

Neighborhood effects, public housing
and unemployment in France*

Claire Dujardin

Université catholique de Louvain - FNRS ⁺

April 2006

Abstract

This paper is aimed at examining how individual unemployment is influenced both by lo-
cation in a deprived neighborhood and public housing. Our identification strategy is twofold.
First, we estimate a simultaneous probit model of public housing accommodation, type of
neighborhood, and unemployment, thus accounting explicitely for correlation of unobserv-
ables between the three behaviors. Second, we take advantage of the situation of the public
housing sector in France, which allows us to use public housing accommodation as a powerful
determinant of neighborhood choices and to use household’s demographic characteristics as
exclusion restrictions. Our results show that public housing does not have any direct effect
on unemployment. However, living within the 35% more deprived neighborhoods does in-
crease the unemployment probability significantly. As expected, the effect of neighborhood
substantially decreases when dealing with the endogeneity of neighborhood and when using
public housing as a determinant of neighborhood choice.

Keywords: Neighborhood effects, public housing, unemployment, simultaneous probit mod-
els, simulated maximum likelihood.

JEL code: R2, J64.

* Claire Dujardin thanks the FNRS for financing a research stay at GATE. Florence Goffette-Nagot acknowl-
edges funding from the CNRS APN-program that allowed initiating this work.

^CORE and Departement de Géographie, Université catholique de Louvain, Place Pasteur 3, 1348 Louvain-la-
Neuve, Belgium e-mail: [email protected].

⅛ATE, CNRS - Universite de Lyon 2 - ENS-LSH, 93 Chemin des Mouilles, 69131 Ecully, Tel: 33
+4.72.86.60.78. Fax: 33 +4.72.86.60.90. France email: [email protected]. Corresponding author.

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