Distinguishing Neighborhood and Workplace Effects on Individual Productivity: Evidence from Sweden

We investigate the effects on individuals’ productivity (captured through their wage income) of two social networks in which individuals are embedded: their residential neighborhood and their workplace. We avail ourselves of Swedish micro-level data which makes it possible to identify individual workers, and who they live next to and work with. We vary the spatial extent of the non-workplace social networkfrom block group to the whole of a metropolitan areato examine which social community most affects an individual’s productivity. We distinguish between individuals engaged in “creative” and “non creative” occupations so as to starkly control for differences in education, training and skills. Our results suggest that residential neighborhoods do matter for individuals’ productivity, although the effect is stronger for noncreatives. For both creatives and noncreatives their workplace group has the greatest effect on income.