If you are a photoshop user it's easy:
For the background you have to duplicate your picture, resize it bigger(CTRL+T) and use the "Gaussian Blur" (Filter -> Blur -> Gaussian Blur) to make it blurry.
For the picture in the front you have to rightclick on the layer and then choose "Blending Options".
Inside the Blending Options you need to make checkmarks on "Stroke" and "Drop Shadow".
Then you click on Stroke first and change the Position to "Inside", so you get the sharp edges and not the rounded ones, if you want so. (You can change Colour and Size to your liking, or whatever fits best for the picture)
After that you click on "Drop Shadow" and change "Distance" to 0, so your shadow is even on every side. Then you have to fiddle around with "Opacity" and "Size", to what looks best on the picture.>>6959852