nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2006‒11‒04
thirteen papers chosen by
Fabio Sabatini
Universita degli Studi di Roma, La Sapienza

  1. Lobbying, Corruption and Political Influence By Campos, Nauro F; Giovannoni, Francesco
  2. Crime and Punishment in the "American Dream" By Rafael Di Tella; Juan Dubra
  3. Peers at Work By Mas, Alexandre; Moretti, Enrico
  4. Social Composition, Social Conflict, and Economic Development By Strulik, Holger
  5. Intergenerational family ties and the diffusion of cohabitation in Italy By Paola Di Giulio; Alessandro Rosina
  6. Mobility of inventors and the geography of knowledge spillovers. New evidence on US data By Stefano Breschi; Francesco Lissoni
  7. Identification of Peer Effects Using Group Size Variation By D'Haultfoeuille, Xavier; Davezies, Laurent; Fougère, Denis
  8. The Impact of Incentives on Human Behavior: Can We Make It Disappear? The Case of the Death Penalty By Naci H. Mocan; R. Kaj Gittings
  9. The Persistence of Underdevelopment: Institutions, Human Capital or Constituencies By Rajan, Raghuram G; Zingales, Luigi
  10. British Colonial Institutions and Economic Development in India By Shilpi Kapur; Sukkoo Kim
  11. Human Capital and Ethnic Self-Identification of Migrants By Constant, Amelie; Gataullina, Liliya; Zimmermann, Klaus F; Zimmermann, Laura
  12. Corporate social responsibility in a general equilibrium stock market model: Solving the financial performance puzzle By Dam, Lammertjan
  13. Migrant networks and foreign direct investment By Javorcik, Beata S.; Ozden, Caglar; Spatareanu, Mariana; Neagu, Cristina

  1. By: Campos, Nauro F; Giovannoni, Francesco
    Abstract: Conventional wisdom suggests that lobbying is the preferred mean for exerting political influence in rich countries and corruption the preferred one in poor countries. Analyses of their joint effects are understandably rare. This paper provides a theoretical framework that focus on the relationship between lobbying and corruption (that is, it investigates under what conditions they are complements or substitutes). The paper also offers novel econometric evidence on lobbying, corruption and influence using data for about 4000 firms in 25 transition countries. Our results show that (a) lobbying and corruption are substitutes, if anything; (b) firm size, age, ownership, per capita GDP and political stability are important determinants of lobby membership; and (c) lobbying seems to be a much more effective instrument for political influence than corruption, even in poorer, less developed countries.
    Keywords: corruption; institutions; lobbying; transition
    JEL: D72 E23 H26 O17 P16
    Date: 2006–10
  2. By: Rafael Di Tella; Juan Dubra
    Abstract: We observe that countries where belief in the "American dream" (i.e., effort pays) prevails also set harsher punishment for criminals. We know from previous work that beliefs are also correlated with several features of the economic system (taxation, social insurance, etc). Our objective is to study the joint determination of these three features (beliefs, punitiveness and economic system) in a way that replicates the observed empirical patterns. We present a model where beliefs determine the types of contracts that firms offer and whether workers exert effort. Some workers become criminals, depending on their luck in the labor market, the expected punishment, and an individual shock that we call "meanness". It is this meanness level that a penal system based on "retribution" tries to detect when deciding the severity of the punishment. We find that when initial beliefs differ, two equilibria can emerge out of identical fundamentals. In the "American" (as opposed to the "French") equilibrium, belief in the "American dream" is commonplace, workers exert effort, there are high powered contracts (and income is unequally distributed) and punishments are harsh. Economists who believe that deterrence (rather than retribution) shapes punishment can interpret the meanness parameter as pessimism about future economic opportunities and verify that two similar equilibria emerge.
    JEL: E62 K14 K42 P16
    Date: 2006–10
  3. By: Mas, Alexandre; Moretti, Enrico
    Abstract: We investigate how and why the productivity of a worker varies as a function of the productivity of her co-workers in a group production process. In theory, the introduction of a high productivity worker could lower the effort of incumbent workers because of free riding; or it could increase the effort of incumbent workers because of peer effects induced by social norms, social pressure, or learning. Using scanner level data, we measure high frequency, worker-level productivity of checkers for a large grocery chain. Because of the firm's scheduling policy, the timing of within-day changes in personnel is unsystematic, a feature for which we find consistent support in the data. We find strong evidence of positive productivity spillovers from the introduction of highly productive personnel into a shift. A 10% increase in average co-worker permanent productivity is associated with 1.7% increase in a worker's effort. Most of this peer effect arises from low productivity workers benefiting from the presence of high productivity workers. Therefore, the optimal mix of workers in a given shift is the one that maximizes skill diversity. In order to explain the mechanism that generates the peer effect, we examine whether effort depends on workers' ability to monitor one another due to their spatial arrangement, and whether effort is affected by the time workers have previously spent working together. We find that a given worker's effort is positively related to the presence and speed of workers who face him, but not the presence and speed of workers whom he faces (and do not face him). In addition, workers respond more to the presence of co-workers with whom they frequently overlap. These patterns indicate that these individuals are motivated by social pressure and mutual monitoring, and suggest that social preferences can play an important role in inducing effort, even when economic incentives are limited.
    Keywords: spillovers
    Date: 2006–10
  4. By: Strulik, Holger
    Abstract: This article shows within a simple growth model how the make up of society affects economic performance when property rights are unenforceable. It investigates behavior of non-cooperative social groups that consume, produce, and appropriate resources either peacefully or through contest. For the case of symmetric groups it is shown that economic growth is generated only in peaceful societies. For the case of asymmetric groups rebel-equilibria are investigated in which a large majority behaves peacefully although challenged by an aggressive minority. In each case it is shown how the possibility of conflict and its intensity and the rate of economic growth depend on social fractionalizaton, general productivity of the economy, and the ease at which resources are appropriated. A final part extends the analysis towards behavior of non-benevolent social elites.
    Keywords: Social Conflict, Social Fractionalization, Property Rights, Stagnation, Growth
    JEL: C73 D74 O11
    Date: 2006–10
  5. By: Paola Di Giulio (Max Planck Institute for Demographic Research, Rostock, Germany); Alessandro Rosina
    Abstract: Cohabitation has been spreading in the population during the last thirty years, and this is one of the most striking aspects of wider social changes that have taken place throughout the industrialized world. However, this change did not take place uniformly across Europe. The purpose of this paper is to contribute to the current debate around the compatibility of cohabitation experiences with the Italian cultural context. Using an individual-level diffusion approach we obtain results that are consistent with the crucial role that family ties play in the choice of cohabitation in place of (or before) marriage.
    Keywords: Italy, cohabitation, diffusion of innovations
    JEL: J1 Z0
    Date: 2006–10
  6. By: Stefano Breschi (CESPRI-Bocconi University, Milan, Italy); Francesco Lissoni (Brescia University and CESPRI-Bocconi University, Italy)
    Abstract: In this paper we exploit new data on US inventors in Organic Chemistry, Pharmaceuticals, and Biotechnology to revisit the JTH test of the localization of knowledge spillovers (Jaffe, Trajtenberg, and Henderson; 1993). We find that inventors who patent across different companies contribute extensively to the observed citation patterns, both directly (through personal self-citations) and indirectly, by linking the various companies via a social network conducive to more citations. To the extent that the geographical mobility of these “cross-firm” inventors is quite limited, the resulting social networks and citations patterns are found to be bounded in space. We conclude that spatial distance, as measured in the JTH experiment, is just a proxy for a much more important variable, such as social distance between inventors. In a similar vein, we show that technological distance, introduced by Thompson and Fox-Kean (2005) to question the soundness of the JTH experiment, is also a proxy of social distance.
    Keywords: Knowledge diffusion, Localized spillovers, Social networks
    JEL: O33 R12 Z13
    Date: 2006–10
  7. By: D'Haultfoeuille, Xavier; Davezies, Laurent; Fougère, Denis
    Abstract: This paper considers the semiparametric identification of endogenous and exogenous peer effects based on group size variation. We show that Lee (2006)’s linear-in-means model is generically identified, even when all members of the group are not observed. While unnecessary in general, homoskedasticity may be required in special cases to recover all parameters. Extensions to asymmetric responses to peers and binary outcomes are also considered. Once more, most parameters are semiparametrically identified under weak conditions. However, recovering all of them requires more stringent assumptions. Eventually, we bring theoretical evidence that the model is more adapted to small groups.
    Keywords: linear-in-means model; semiparametric identification; social interactions
    JEL: C14 C21 C25
    Date: 2006–10
  8. By: Naci H. Mocan; R. Kaj Gittings
    Abstract: Although decades of empirical research has demonstrated that criminal behavior responds to incentives, non-economists frequently express the belief that human beings are not rational enough to make calculated decisions about the costs and benefits of engaging in crime and therefore, a priori drawing the conclusion that criminal activity cannot be altered by incentives. However, scientific research should not be driven by personal beliefs. Whether or not economic conditions matter or deterrence measures such police, arrests, prison deaths, executions, and commutations provide signals to people is an empirical question, which should be guided by a solid theoretical framework. In this paper we extend the analysis of Mocan and Gittings (2003). We alter the original model in a number of directions to make the relationship between homicide rates and death penalty related outcomes (executions, commutations and removals) disappear. We deliberately deviate from the theoretically consistent measurement of the risk variables originally employed by Mocan and Gittings (2003) in a variety of ways. We also investigate the sensitivity of the results to changes in the estimation sample (removing high executing states for example) and weighting. The basic results are insensitive to these and a variety of other specification tests performed in the paper. The results are often strong enough to even hold up under theoretically meaningless measurements of the risk variables. In summary, the original findings of Mocan and Gittings (2003) are robust, providing evidence that people indeed react to incentives induced by capital punishment. Research findings about the deterrent effect of the death penalty evoke strong feelings, which could be due to political, ideological, religious, or other personal beliefs. Yet, such findings do not mean that capital punishment is good or bad, nor does it provide any judgment about whether capital punishment should be implemented or abolished. It is simply a scientific finding which demonstrates that people react to incentives. Therefore, there is no need to be afraid of this result.
    JEL: K0 K14 K4 K42
    Date: 2006–10
  9. By: Rajan, Raghuram G; Zingales, Luigi
    Abstract: Why is underdevelopment so persistent? One explanation is that poor countries do not have institutions that can support growth. Because institutions (both good and bad) are persistent, underdevelopment is persistent. An alternative view is that underdevelopment comes from poor education. Neither explanation is fully satisfactory, the first because it does not explain why poor economic institutions persist even in fairly democratic but poor societies, and the second because it does not explain why poor education is so persistent. This paper tries to reconcile these two views by arguing that the underlying cause of underdevelopment is the initial distribution of factor endowments. Under certain circumstances, this leads to self-interested constituencies that, in equilibrium, perpetuate the status quo. In other words, poor education policy might well be the proximate cause of underdevelopment, but the deeper (and more long lasting cause) are the initial conditions (like the initial distribution of education) that determine political constituencies, their power, and their incentives. Though the initial conditions may well be a legacy of the colonial past, and may well create a perverse political equilibrium of stagnation, persistence does not require the presence of coercive political institutions. We present some suggestive empirical evidence. On the one hand, such an analysis offers hope that the destiny of societies is not preordained by the institutions they inherited through historical accident. On the other hand, it suggests we need to understand better how to alter factor endowments when societies may not have the internal will to do so.
    Keywords: human capital; institutions
    JEL: L10
    Date: 2006–10
  10. By: Shilpi Kapur; Sukkoo Kim
    Abstract: We explore the impact of British colonial institutions on the economic development of India. In some regions, the British colonial government assigned property rights in land and taxes to landlords whereas in others it assigned them directly to cultivators or non-landlords. Although Banerjee and Iyer (2005) find that agricultural productivity of non-landlord areas diverged and out-performed relative to landlord areas after 1965 with the advent of the Green Revolution, we find evidence of superior economic performance of non-landlord regions in both the pre- and the post-independence periods. We believe that landlord and non-landlord regions diverged because their differing property rights institutions led to differences in incentives for development.
    JEL: N45 O10 P14
    Date: 2006–10
  11. By: Constant, Amelie; Gataullina, Liliya; Zimmermann, Klaus F; Zimmermann, Laura
    Abstract: The paper investigates the role of human capital for migrants' ethnic ties towards their home and host countries. Pre-migration characteristics dominate ethnic self-identification. Human capital acquired in the host country does not affect the attachment to the receiving country.
    Keywords: ethnic self-identification; ethnicity; first-generation migrants; gender; human capital
    JEL: F22 J15 J16 J24 Z10
    Date: 2006–10
  12. By: Dam, Lammertjan (Groningen University)
    Abstract: We analyze corporate social responsibility (CSR) in a general equilibrium stock market model with uncertainty in production. Production generates non-market costs and consumers take this into account when they construct their portfolio. We deduce empirically testable hypotheses and analyze how CSR affects various financial performance indicators. We show that our model offers an excellent explanation of the seemingly contradictory findings in the existing empirical literature. We stress that our findings are not a result of assumptions on the operational level of the firm. We conclude that there is a clear and direct association between CSR and different measures of corporate financial performance.
    Date: 2006
  13. By: Javorcik, Beata S.; Ozden, Caglar; Spatareanu, Mariana; Neagu, Cristina
    Abstract: While there exists sizeable literature documenting the importance of ethnic networks for international trade, little attention has been devoted to studying the effects of networks on foreign direct investment (FDI). The existence of ethnic networks may positively affect FDI by promoting information flows across international borders and by serving as a contract enforcement mechanism. This paper investigates the link between the presence of migrants in the United States and U.S. FDI in the migrants ' countries of origin, taking into account the potential endogeneity concerns. The results suggest that U.S. FDI abroad is positively correlated with the presence of migrants from the host country. The data further indicate that the relationship between FDI and migration is driven by the presence of migrants with a college education.
    Keywords: Population Policies,Economic Theory & Research,Voluntary and Involuntary Resettlement,Anthropology,Human Migrations & Resettlements
    Date: 2006–11–01

This nep-soc issue is ©2006 by Fabio Sabatini. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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