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Labor supply and the business cycle: The “bandwagon worker effect”
Author(s) -
MartínRomán Ángel L.,
CuéllarMartín Jaime,
Moral Alfonso
Publication year - 2020
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/pirs.12542
Subject(s) - bandwagon effect , business cycle , neighbourhood (mathematics) , economics , construct (python library) , labour economics , labour supply , econometrics , psychology , mathematics , computer science , social psychology , macroeconomics , mathematical analysis , programming language
The relationship between labour force participation and the business cycle is a common topic in economic literature. However, few studies have examined if the cyclical sensitivity of labour force participation is influenced by social effects. In this paper, we construct a theoretical model defining a relatively new hypothesis, the bandwagon worker effect (BWE). We use spatial econometrics techniques to test the existence of the BWE in the local labour markets in Spain. Our results reveal a positive spatial dependence in the cyclical sensitivity of labour force participation that decreases as we fix a laxer neighbourhood criterion, which verifies the existence of the BWE.