DP2362 Labour Supply and Matching Rates for Welfare Recipients: An Analysis Using Neighbourhood Characteristics

Author(s): Bas van der Klaauw, Jan C. van Ours
Publication Date: January 2000
Keyword(s): Spillovers, Unemployment Duration, Welfare To Work
JEL(s): C41, J61, J64, R23
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=2362

This paper investigates how in addition to personal characteristics the neighbourhood affects the individual transition rate from welfare to work. We use a unique administrative database on welfare recipients in Rotterdam, the second largest city of The Netherlands. We find that the exit rate to work of young Dutch welfare recipients is influenced by the neighbourhood unemployment rate. Other neighbourhood characteristics such as the average housing price are not important. From this we conclude that for young Dutch welfare recipients a high local unemployment rate has a negative spillover effect on the transition from welfare to work.