Investigating neighbourhood effects in welfare-to-work transitions

We analyse the existence and underlying mechanisms of neighbourhood effects in welfare-to-work transitions. The analysis is based on Luxembourg social security longitudinal data, which covers period 2001-2015 provides precise information at postcode level, corresponding mostly to streets. Our identification strategy exploits plausible exogenous variations among neighbours provided by thinness housing market once controlling for residential sorting. first examine interactions all using an individual-level analysis, before focusing only welfare recipients a matched-pair analysis. This second step allows us deal with mediating effect recipients' citizenship. main findings highlight transitions, are also affected characteristics neighbours, including their These suggest that norms and/or stigma prevail transitions over support find job, but not in-group recipients. contrasting results across citizenship individuals from large-sized groups (interactions within own group) medium-sized between groups).