nep-net New Economics Papers
on Network Economics
Issue of 2020‒10‒05
ten papers chosen by
Alfonso Rosa García
Universidad de Murcia

  1. Peers, Gender, and Long-Term Depression By Giulietti, Corrado; Vlassopoulos, Michael; Zenou, Yves
  2. Abstentions and Social Networks in Congress By Marco Battaglini; Valerio Leone Sciabolazza; Eleonora Patacchini
  3. On the Equilibrium Properties of Network Models with Heterogeneous Agents By Treb Allen; Costas Arkolakis; Xiangliang Li
  4. Agglomeration Economies and Race Specific Spillovers By Elizabeth Ananat; Shihe Fu; Stephen L. Ross
  5. Network geometry and market instability By Areejit Samal; Hirdesh Kumar Pharasi; Sarath Jyotsna Ramaia; Harish Kannan; Emil Saucan; J\"urgen Jost; Anirban Chakraborti
  6. The Contribution of Residential Segregation to Racial Income Gaps: Evidence from South Africa By Florent Dubois; Christophe Muller
  7. The tradeoff between indirect network effects and product differentiation in a decarbonized transport market By Andreassen, Gøril Louise; Rosendahl, Knut Einar
  8. The emergence of core-periphery structures in the European Union: A complexity perspective By Gräbner, Claudius; Hafele, Jakob
  9. The Specialization of Informal Social Control: Fighting in the National Hockey League from 1960-2012 By Sirianni, Antonio
  10. Knowledge Networks and Strong Tie Creation: the Role of Relative Network Position By Maria Tsouri; ;

  1. By: Giulietti, Corrado (University of Southampton); Vlassopoulos, Michael (University of Southampton); Zenou, Yves (Monash University)
    Abstract: This study investigates whether exposure to peer depression in adolescence affects own depression in adulthood. We find a significant long-term depression peer effect for females but not for males in a sample of U.S. adolescents who are followed into adulthood. An increase of one standard deviation of the share of own-gender peers (schoolmates) who are depressed increases the probability of depression in adulthood by 2.6 percentage points for females (or 11.5% of mean depression). We also find that the peer effect is already present in the short term when girls are still in school and provide suggestive evidence for why it persists over time. In particular, we show that peer depression negatively affects the probability of college attendance and the likelihood of working, and leads to a reduction in income of adult females. Further analysis reveals that individuals from families with a lower socioeconomic background are more susceptible to peer influence, thereby suggesting that family can function as a buffer.
    Keywords: peer effects, depression, contagion, gender, family background, adolescence, policy
    JEL: I12 Z13
    Date: 2020–09
  2. By: Marco Battaglini; Valerio Leone Sciabolazza; Eleonora Patacchini
    Abstract: We study the extent to which personal connections among legislators influence abstentions in the U.S. Congress. Our analysis is conducted by observing representatives' abstention for the universe of roll call votes held on bills in the 109th-113th Congresses. Our results show that a legislator's propensity to abstain increases when the majority of his or her alumni connections abstains, even after controlling for other well-known predictors of abstention choices and a vast set of fixed effects. We further reveal that a legislator is more prone to abstain than to take sides when the demands from personal connections conflict with those of the legislator's party.
    JEL: D72 D74 D91
    Date: 2020–09
  3. By: Treb Allen; Costas Arkolakis; Xiangliang Li
    Abstract: In this note, we consider a broad class of network models where a large number of heterogeneous agents simultaneously interact in many ways. We provide an iterative algorithm for calculating an equilibrium and offer sufficient and “globally necessary” conditions under which the equilibrium is unique. The results arise from a multi-dimensional extension of the contraction mapping theorem which allows for the separate treatment of the different types of interactions. We illustrate that a wide variety of heterogeneous agent economies – characterized by spatial, production, or social networks – yield equilibrium representations amenable to our theorem's characterization.
    JEL: C6 D85 E23 F4 O18 R13
    Date: 2020–09
  4. By: Elizabeth Ananat (Barnard College, Columbia University); Shihe Fu (Southwest University of Finance and Economics); Stephen L. Ross (University of Connecticut)
    Abstract: Racial social isolation within workplaces may reduce firm productivity. We provide descriptive evidence that African-Americans feel socially isolated from whites. To test whether isolation affects productivity, we estimate models of Total Factor Productivity for manufacturing firms allowing the returns to concentrated economic activity and human capital to vary by the match between each establishment’s racial and ethnic composition and the composition of local area employment. Higher own-race representation increases the productivity return from employment density and concentrations of college educated workers. Looming demographic changes suggest that this drag on economic productivity may increase over time.
    Keywords: agglomeration economies, firm productivity, human capital externalities, information networks, racial and ethnic isolation
    JEL: J15 J24 L11 R32 R12 R23
    Date: 2020–09
  5. By: Areejit Samal; Hirdesh Kumar Pharasi; Sarath Jyotsna Ramaia; Harish Kannan; Emil Saucan; J\"urgen Jost; Anirban Chakraborti
    Abstract: The complexity of financial markets arise from the strategic interactions among agents trading stocks, which manifest in the form of vibrant correlation patterns among stock prices. Over the past few decades, complex financial markets have often been represented as networks whose interacting pairs of nodes are stocks, connected by edges that signify the correlation strengths. However, we often have interactions that occur in groups of three or more nodes, and these cannot be described simply by pairwise interactions but we also need to take the relations between these interactions into account. Only recently, researchers have started devoting attention to the higher-order architecture of complex financial systems, that can significantly enhance our ability to estimate systemic risk as well as measure the robustness of financial systems in terms of market efficiency. Geometry-inspired network measures, such as the Ollivier-Ricci curvature and Forman-Ricci curvature, can be used to capture the network fragility and continuously monitor financial dynamics. Here, we explore the utility of such discrete Ricci-type curvatures in characterizing the structure of financial systems, and further, evaluate them as generic indicators of the market instability. For this purpose, we examine the daily returns from a set of stocks comprising the USA S&P-500 and the Japanese Nikkei-225 over a 32-year period, and monitor the changes in the edge-centric network curvatures. We find that the different geometric measures capture well the system-level features of the market and hence we can distinguish between the normal or 'business-as-usual' periods and all the major market crashes. This can be very useful in strategic designing of financial systems and regulating the markets in order to tackle financial instabilities.
    Date: 2020–09
  6. By: Florent Dubois (EconomiX - UMR 7235, Université Paris Nanterre, France); Christophe Muller (Aix-Marseille Univ, CNRS, AMSE, Marseille, France.)
    Abstract: In this paper, we contend that local segregation should be an essential component of the analyzes of the determination of socio-ethnic income gaps. For this, we adopt a thorough distribution decomposition approach, as a general preliminary descriptive step to prospective specific structural analyses. Focusing on the contemporary White/African gap in South Africa, we first complete Mincer wage equations with an Isolation index that reflects the level of segregation in the local area where individuals dwell. Second, we decompose the income gap distribution into detailed composition and structure components. Third, we explore the heterogeneity of segregation effects on wage gaps along three theoretical lines: racial preferences, labor market segmentation, and networks links. Segregation is found to be the main contributor of the structure effect, ahead of education and experience, and to make a sizable contribution to the composition effect. Moreover, segregation is harmful at the bottom of the African income distribution, notably in relation to local informal job-search networks, while it is beneficial at the top of the White income distribution. Only minor influences of racial preferences and labor market segmentation are found. Specific subpopulations are identified that suffer and benefit most from segregation, including for the former, little educated workers in agriculture and mining, often female, immersed in their personal networks. Finally, minimum wage policies are found likely to attenuate most segregation’s noxious mechanisms.
    Keywords: post-apartheid South Africa, generalized decompositions, income distribution, residential segregation
    JEL: J15 D31 R23
    Date: 2020–09
  7. By: Andreassen, Gøril Louise (School of Economics and Business, Norwegian University of Life Sciences); Rosendahl, Knut Einar (School of Economics and Business, Norwegian University of Life Sciences)
    Abstract: What factors determine whether it is optimal with one or more technologies in a decarbonized road transport sector, and what policies should governments choose? We investigate these questions theoretically and numerically through a static, partial equilibrium model for the road transport market. We find that two important factors that determine whether it will be and whether it should be one or more technologies are how close substitutes the two vehicle technologies are and the number of vehicles of the other technology. Our numerical results indicate that with two incompatible networks, two differentiated goods are optimal compared to only one if they are not too close substitutes. The first-best policy is a subsidy of the markup on charging and filling, where the markup is higher the higher the increased utility of more stations. In addition, to avoid an unwanted lock-in, a temporary stimulus may be needed to reach the stable equilibrium.
    Keywords: Indirect network effects; Decarbonization; Climate policy; Electric vehicles; Hydrogen vehicles
    JEL: H23 L14 L91 Q58
    Date: 2020–03–25
  8. By: Gräbner, Claudius; Hafele, Jakob
    Abstract: This paper investigates the emergence of polarisation patterns in the EU during the last 60 years from a structuralist and complexity economics perspective. Based on the results, feasible opportunities for EU policy-making, which aim to counteract a tendency of polarization, are delineated. The study comprises of a historical analysis of the politico-economic events during this time and a complementary quantitative analysis of the European trade network. The results suggest that trade in the Eurozone is unequal at the expense of the peripheries and follows a pattern of "unequal technological exchange". The paper also assesses the usefulness of country taxonomies such as 'cores' and 'peripheries' for identifying the roots of polarization patterns. While it generally affirms the relevance of structural dependencies, and confirms the epistemic usefulness of country taxonomies, it also highlights three challenges - the challenges of dynamics, of ambiguity and granularity - that any such taxonomy necessarily faces, and which must be dealt with explicitly in any structuralist analysis using such taxonomies.
    Date: 2020
  9. By: Sirianni, Antonio
    Abstract: The presence and value of systems of informal social control have been well-studied by sociologists and criminologists. While systems of informal control are by their very nature more decentralized and unorganized, can systems of informal social control come to resemble centralized systems of formal control? This article offers a highly detailed empirical analysis of a particular form of informal social control in a highly observable setting over time: fist-fighting in the National Hockey League. Fighting is commonly understood to be both an instrument of retaliatory “self-help” exercised by all players, but also the semi-exclusive domain of “enforcers” or “goons” who are employed by teams to physically retaliate on behalf of their opponents and deter violent play in others. A 52-year record of nearly 30,000 fist fights between players is analyzed alongside other player statistics. An analysis of the player distribution, network structure, and in-game contexts of these fights demonstrates a gradual shift from a system of self-help to a system of specialized enforcement. This shift is connected to larger changes in the size of the league and the talent pool, processes of specialization at the level of the team, and the emergence of an unofficial “enforcer” role that motivates participation in fights for certain players.
    Date: 2019–02–22
  10. By: Maria Tsouri; ;
    Abstract: The proximity literature usually treats proximity in terms of common attributes shared by agents, disregarding the relative position of an actor inside the network. This paper discusses the importance of such dimension of proximity, labelled as in-network proximity, and proposes an empirical measurement for it, assessing its impact (jointly with other dimensions of proximity) on the creation of strong knowledge network ties in ICT in the region of Trentino. The findings show that actors with higher in-network proximity are more attractive for both other central actors and peripheral ones, which is further strengthening their position within the network.
    Keywords: knowledge networks, in-network proximity, strong ties, proximity dimensions
    Date: 2020–09

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