nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2006‒06‒17
thirteen papers chosen by
Fabio Sabatini
Universita degli Studi di Roma, La Sapienza

  1. Social Capital and Cooperation in Central and Eastern Europe - A Theoretical Perspective Abstract By Catherine Murray
  2. Does Democracy Foster Trust? By Helmut Rainer; Thomas Siedler
  3. Empirics of Social Interactions By Yannis Ioannides
  5. Knowledge flows and the geography of networks. A strategic model of small worlds formation. By Nicolas Carayol; Pascale Roux
  6. Determinants influencing the choice of a cooperation partner By Uwe Cantner; Andreas Meder
  7. The social multiplier and labour market participation of mothers. By Eric Maurin; Julie Moschion
  8. The Downside of Knowledge Spillovers: An Explanation for the Dispersion of High-tech Industries By Christoph Alsleben
  9. Does crime affect economic decisions? An empirical investigation of savings in a high-crime environment By João Manoel Pinho de Mello; Eduardo Zilberman
  10. Naturalisation and Socioeconomic Integration: The Case of the Netherlands By Pieter Bevelander; Justus Veenman
  11. Does Corruption Produce Unsafe Drivers? By Marianne Bertrand; Simeon Djankov; Rema Hanna; Sendhil Mullainathan
  12. Network Effects and Switching Costs: two short essays for the new New Palgrave By Paul Klemperer
  13. Economic, Neurobiological and Behavioral Perspectives on Building America%u2019s Future Workforce By Eric I. Knudsen; James J. Heckman; Judy L. Cameron; Jack P. Shonkoff

  1. By: Catherine Murray (Humboldt University Berlin, Department of Agricultural Economics and Social Sciences, Chair of Resource Economics, Luisenstr. 56, 10099 Berlin)
    Abstract: The transition process in central and eastern Europe (CEE) had a profound effect on how individuals interact. Economic and social institutions have changed, requiring an adaptation process by individuals in the move toward a market economy. How each individual accesses, manipulates and uses their networks will determine the use of their social capital. Within CEE, there is a presumption of low levels of social capital. This paper was written as a conceptual framework for a research project entitled ?Integrated Development of Agricultural and Rural Institutions? (IDARI) in CEE countries. One element of the IDARI project is to understand the emergence and maintenance of cooperative behaviour in light of rural restructuring and institutional change in CEE. A link exists between social capital formation and cooperation amongst individuals, as both concepts imply social interaction and the formation of trust. This paper questions the rationale of applying the contested "western" concept of social capital to CEE countries. It argues that although the concept was developed to understand processes within established democratic systems, it nevertheless is instrumental for analysing how trust is formed, and for understanding cooperation amongst individuals. As such, this framework reconciles literature from sociological and economic disciplines. Social networks and use of those networks (social capital) is becoming more important in light of accession to the EU, particularly when opportunities within and access to rural and regional development programmes are dependent on existing networks. Social capital is seen as a dynamic entity, a form of institutional change, which leads to innovation in the existing governance structures. Thus social capital provides a powerful explanatory tool for processes of institutional change.
    Date: 2005–06
  2. By: Helmut Rainer (University of St. Andrews); Thomas Siedler (University of Essex, DIW Berlin and IZA Bonn)
    Abstract: The level of trust inherent in a society is important for a wide range of microeconomic and macroeconomic outcomes. This paper investigates how individuals’ attitudes toward social and institutional trust are shaped by the political regime in which they live. The German reunification is a unique natural experiment that allows us to conduct such a study. Using data from the German General Social Survey (ALLBUS) and from the German Socio- Economic Panel Study (SOEP), we obtain two sets of results. On one side, we find that, shortly after reunification, East Germans displayed a significantly less trusting attitude than West Germans. This suggests a negative effect of communism in East Germany versus democracy in West Germany on social and institutional trust. However, the experience of democracy by East Germans since reunification did not serve to increase levels of social trust significantly. In fact, we cannot reject the hypothesis that East Germans, after more than a decade of democracy, have the same levels of social distrust as shortly after the collapse of communism. In trying to understand the underlying causes, we show that the persistence of social distrust in the East can be explained by negative economic outcomes that many East Germans experienced in the post-reunification period. Our main conclusion is that democracy can foster trust in post-communist societies only when citizens’ economic outcomes are right.
    Keywords: social trust, institutional trust, political regimes
    JEL: P51 Z13
    Date: 2006–05
  3. By: Yannis Ioannides
    Abstract: Empirical studies of social interactions address a multitude of definitional, econometric and measurement issues associated with role of interpersonal and social group influences in economic decisions. Applications range from studies of crime patterns, neighborhood influences on upbringing and conformist behavior, mutual influences among classmates and keeping up with roommates in colleges regarding academic and social activities, to herding and to learning about social services. The entry reviews several instances of successful identification of effects emanating from others' behavior as distinct from characteristics of others. Data sets with increasingly rich contextual information will allow estimation of complex models of economic decisions.
    Keywords: Social interactions, peer effects, contextual effects, neighborhood choice, neighbors, neighborhoods, neighborhood effects, laboratory experiments, field experiments, self selection, social networks.
    JEL: C25 I30 R00
    Date: 2006
  4. By: Friederike Mengel (Universidad de Alicante)
    Abstract: I present and study an evolutionary model of immigration and culturaltransmission of social norms in a set-up where agents are repeatedly matchedto play a one-shot interaction prisoner´s dilemma. Matching can be non-randomdue to limited integration (or population viscosity). The latter refers to atendency of individuals to have a higher rate of interaction with individuals oftheir type than with similar numbers of other agents. I derive a culturaltransmission mechanism in order to examine the influence of viscosity and ofother institutional characteristics of society on the evolutionary selection of prosocialnorms. The main findings are that strict norms, sustained by stronginternal punishment, need either viscosity or strong institutional pressures topersist, while norms of intermediate strength persist under a variety ofinstitutional characteristics. Endogenizing norm strength allows to identify twoscenarios in which pro-social norms survive: One of rigidity in whichseparation (high viscosity) leads to monomorphic equilibria with strict normsfor cooperation. And one of integration (low viscosity) where intermediatenorms persist in polymorphic equilibria. Furthermore, with endogenous norms,viscosity and cooperation are not linked in a monotone way.
    Keywords: Cultural Evolution, Game Theory, Social Norms, Cooperation, Population Viscosity.
    JEL: C70 C73 Z13
    Date: 2006–06
  5. By: Nicolas Carayol; Pascale Roux
    Abstract: This paper aims to demonstrate that the strategic approach of network formation can generate networks that share the main structural properties of most real social networks. We introduce a spatialized variation of the Connections model (Jackson and Wolinski, 1996) in which agents balance the benefits of forming links resulting from imperfect knowledge flows through bonds against their costs which increase with geographic distance. We show that, for intermediary levels of knowledge transferability, our time-inhomogeneous process selects networks which exhibit high clustering, short average distances and, when the costs of link formation are normally distributed across agents, skewed degree distributions.
    Keywords: Strategic network formation ; Time-inhomogeneous process ; Knowledge flows ; Small worlds ; Monte Carlo simulations.
    JEL: D85 C63 Z13
    Date: 2006
  6. By: Uwe Cantner (University of Jena, Faculty of Economics); Andreas Meder (University of Jena, Faculty of Economics)
    Abstract: This paper provides empirical tests of hypotheses of cooperative behavior provided by evolutionary approaches in the resource-based view of the firm. The influences of "technological proximity", individual incentives to cooperate and managerial tools to the choice of research partner are analyzed. Using German patent data we can show the positive influence of those three determinants. The results of this paper confirm theories dealing with the path-dependency of research activities.
    Keywords: innovation, resource-based view of the firm, cooperation, technological proximity, organizational know-how
    JEL: C30 L14 O32
    Date: 2006–06–10
  7. By: Eric Maurin (Paris-Jourdan Sciences Economiques (PSE) - CEE - CEPR - CREST et IZA); Julie Moschion (Centre d'Economie de la Sorbonne)
    Abstract: In France as in the US, the participation of a mother in the labour market is influenced by the sex of her oldest siblings. Same-sex mothers tend to have more children and to work significantly less than the other mothers. In contrast, the sex of the oldest siblings does not have any perceptible influence on neighbourhood choices. There is no correlation between the sex of the siblings of a mother and the sex of the siblings of the other mothers living in the same close neighbourhood. Given these facts, the distribution of the sex of the siblings of the other mothers provides us with a plausible instrumental variable to identify the influence of other mothers' participation on a mother's participation in the labour market. Reduced-form analysis reveals that a mother's participation in the labour market is significantly affected by the sex of the oldest siblings of the other mothers living in the same neighbourhood. IV estimates suggest a strong impact of close neighbours' participation in the labour market on individual participation. We compare this result to estimates produced using the distribution of children's quarters of birth to generate instruments. Mothers whose children were born at the end of the year cannot send their children to pre-elementary school as early as the other mothers and participate less in the labour market. Interestingly enough, estimates using the distribution of quarters of birth in the neighbourhood as instruments are as strong as estimates using the sex-mix instruments.
    Keywords: Female participation in the labour market, neighbourhood effects, social multiplier.
    JEL: J22
    Date: 2006–05
  8. By: Christoph Alsleben
    Abstract: Both theoretical work on knowledge spillovers and regional policy initiatives often assume that there exists a general and unanimous advantage for firms to cluster. But opposed to the benefit is the disadvantage of sharing knowledge with other (rival) firms. This paper highlights the "downside" associated with knowledge spillovers and presents a four-stage game of location choice where spillovers result from labour poaching and where the strategic interaction between firms may make them avoid colocation with spillovers. The model follows Combes and Duranton (2001) and provides an explanation for the dispersion of German high-tech industries we found in a companion paper.
  9. By: João Manoel Pinho de Mello (Department of Economics PUC-Rio.); Eduardo Zilberman (Department of Economics, New York University)
    Abstract: While most economic studies of crime have focused on its determinants, we study the reverse question: does crime affect economic behavior? Being such an important social phenomenon, one would expect crime to affect economic decisions. Using local data on crime rates and savings per capita in a high-crime environment, we document a striking empirical relationship: crime induces savings. Our paper is one of the first to successfully relate crime to an economic outcome. This result is robust to an extensive sensitivity analysis, which include: 1) controlling to a large set of demographic covariates; 2) accounting for the fact that crime and savings may be determined jointly; 3) measuring savings in different ways; 4) accounting for the presence of possible outliers; 5) weighting the data according to population; 6) accounting for spatial correlation; and, finally, 7) estimating the model for different sub-samples of cities. Our estimates indicate that only property, not violent, crime induces savings, which is consistent with the theoretical explanations on why crime would increase thriftiness
    Keywords: Crime, Economic Behavior, Savings
    JEL: D00 D91 R11 Z19
    Date: 2006–05
  10. By: Pieter Bevelander (IMER, Malmö University and IZA Bonn); Justus Veenman (Erasmus University Rotterdam)
    Abstract: This paper investigates Dutch immigrants’ naturalisation decision and how naturalisation affects their employment chances and wages in the Netherlands. The population under consideration consists mainly of refugees from Afghanistan, Iran, Iraq, Somalia and former Yugoslavia, and a minority of immigrants from Turkey and Morocco. The data used come from the Dutch survey ‘Social Position and Use of Public Utilities by Migrants’ for the years 2002 and 2003. A multivariate analysis shows that higher educational levels and having obtained an education in the Netherlands positively affects naturalisation. In turn naturalisation is positively related to the job chances among immigrants and refugees. It is also positively related to wages among refugees, but not among Mediterranean immigrants who came to the Netherlands for various reasons.
    Keywords: immigration, naturalisation, citizenship, socio-economic integration
    JEL: F22 J61 J68
    Date: 2006–05
  11. By: Marianne Bertrand; Simeon Djankov; Rema Hanna; Sendhil Mullainathan
    Abstract: We follow 822 applicants through the process of obtaining a driver’s license in New Delhi, India. To understand how the bureaucracy responds to individual and social needs, participants were randomly assigned to one of three groups: bonus, lesson, and comparison groups. Participants in the bonus group were offered a financial reward if they could obtain their license fast; participants in the lesson group were offered free driving lessons. To gauge driving skills, we performed a surprise driving test after participants had obtained their licenses. Several interesting facts regarding corruption emerge. First, the bureaucracy responds to individual needs. Those who want their license faster (e.g. the bonus group), get it 40% faster and at a 20% higher rate. Second, the bureaucracy is insensitive to social needs. The bonus group does not learn to drive safely in order to obtain their license: in fact, 69% of them were rated as “failures” on the independent driving test. Those in the lesson group, despite superior driving skills, are only slightly more likely to obtain a license than the comparison group and far less likely (by 29 percentage points) than the bonus group. Detailed surveys allow us to document the mechanisms of corruption. We find that bureaucrats arbitrarily fail drivers at a high rate during the driving exam, irrespective of their ability to drive. To overcome this, individuals pay informal “agents” to bribe the bureaucrat and avoid taking the exam altogether. An audit study of agents further highlights the insensitivity of agents’ pricing to driving skills. Together, these results suggest that bureaucrats raise red tape to extract bribes and that this corruption undermines the very purpose of regulation.
    Date: 2006–06
  12. By: Paul Klemperer (Nuffield College, University of Oxford)
    Abstract: We briefly survey the economics of network effects and switching costs (in 3,400 words). For comprehensive coverage of the same ground see Farrell and Klemperer’s 60,000-word contemporaneous survey, available at
    Date: 2006–06–08
  13. By: Eric I. Knudsen; James J. Heckman; Judy L. Cameron; Jack P. Shonkoff
    Abstract: A growing proportion of the U.S. workforce will have been raised in disadvantaged environments that are associated with relatively high proportions of individuals with diminished cognitive and social skills. A cross-disciplinary examination of research in economics, developmental psychology, and neurobiology reveals a striking convergence on a set of common principles that account for the potent effects of early environment on the capacity for human skill development. Central to these principles are the findings that early experiences have a uniquely powerful influence on the development of cognitive and social skills, as well as on brain architecture and neurochemistry; that both skill development and brain maturation are hierarchical processes in which higher level functions depend on, and build on, lower level functions; and that the capacity for change in the foundations of human skill development and neural circuitry is highest earlier in life and decreases over time. These findings lead to the conclusion that the most efficient strategy for strengthening the future workforce, both economically and neurobiologically, and for improving its quality of life is to invest in the environments of disadvantaged children during the early childhood years.
    JEL: J24
    Date: 2006–06

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