Displacement-Free Social Network Spillover Boundaries
Concerns arise that active labor market policies simply reallocate a fixed pool of jobs from untreated workers to treated workers within localized neighborhood boundaries rather than improving overall matching efficiency.
Picture this
Imagine two people living on the same street who apply for jobs at a company five miles away in the city center. Because they are competing against applicants from across the entire city, giving one neighbor better application documents does not take a job away from the other neighbor specifically—any displacement spreads thinly across the entire metropolitan area.
What the evidence says
Local treatment saturation within 300m cluster boundaries produced zero localized job displacement; because workers commute across the integrated urban market, peer spillovers operate via social network information sharing rather than localized zero-sum job reallocation.
- Who
- **N = 3,052 youth** sampled from geographic clusters averaging <300m in diameter located >2.5 km (average ~6 km) from the Central Business District (CBD) in Addis Ababa, Ethiopia.
- How
- Spatial commuting analysis comparing local cluster boundaries against city-wide labor market integration (median one-way commute of 35 minutes; >90% commuting over 15 minutes).
What to do
Define spillover assessment units based on realistic worker commuting radii to distinguish localized social network information sharing from broader market-wide displacement effects.
From the source
"Therefore, we do not expect to see local labour market effects concentrated in the areas where treatment was saturated. To the extent that Addis Ababa constitutes one large labour market... any reallocation of jobs would take place at the level of the entire city... We interpret these results as being driven through social networks rather than labour market displacement."
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