Experience of unemployment is known to predict poorer future success in the labour market. It is less well known how much this depends on the characteristics of the local social environment. This paper builds on the supposition that the unemployment rate in the neighbourhood modifies the social processes linking personal unemployment to later labour market outcomes. Data from the Helsinki metropolitan area in Finland during and after a deep recession in the 1990s are used to analyse the effect of personal unemployment on later earnings by neighbourhood unemployment rate. Results indicate that the neighbourhood unemployment rate modifies the effect of personal unemployment: a higher neighbourhood unemployment rate predicts lower later earnings, especially for males. A similar effect is not found in the case of employed residents.
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