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on Social Norms and Social Capital |
| By: | Francois, Patrick; van Ypersele, Tanguy |
| Abstract: | This paper documents a strong positive relationship between individual reported trust levels (obtained from the US General Social Survey) and the competitiveness of the sector in which an individual works (obtained from the US census of firms). This correlation is robust to the inclusion of all of the previously studied determinants of individual trust, e.g., income, education, age, sex, marital status, city size, religion, and is large; a one standard deviation increase in sectoral competitiveness makes respondents approximately five percent more likely to answer the canonical trust question with a "usually trust" as opposed to a "usually don’t trust" response. The addition of a rich set of workplace controls shows that this correlation is not likely to be driven by the size of the workplace, the amount of supervision, or related to a congenial work culture. It also appears that it is not due to selection (i.e., trustworthy or trusting individuals selecting into competitive sectors) or risk aversion, but instead seems to be due to individuals becoming more trusting the longer their experience in competitive sectors. We conjecture that trust levels are high when workplaces are characterized by high contributions of discretionary effort, i.e., when co-workers are more likely to be trustworthy. We develop a model which shows that such discretionary efforts are more likely to arise when competition within a sector is high. Competition mitigates incentives for free-riding by imposing costly shut-down on poor performing firms, makes employees more trustworthy, and thus increases trust. The model generates a positive correlation between trust and sectoral competitiveness, displays a threshold effect, suggests a non-monotonic relationship between competition and job security, and predicts patterns for a number of other variables. The data displays a high degree of consistency with these predictions. |
| Keywords: | Competition; Trust; Values |
| JEL: | D10 J54 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7368&r=soc |
| By: | Wahba, Jackline; Zenou, Yves |
| Abstract: | The aim of this paper is to investigate whether return migrants are more likely to become entrepreneurs than non-migrants. We develop a theoretical search model that puts forward the trade off faced by returnees since overseas migration provides an opportunity for human and physical capital accumulation but, at the same time, may lead to a loss of social capital back home. We test the predictions of the model using data from Egypt. We find that, even after controlling for the endogeneity of the temporary migration decision, an overseas returnee is more likely to become an entrepreneur than a non-migrant. Although migrants lose their original social networks whilst overseas, savings and human capital accumulation acquired abroad over-compensate for this loss. Our results also suggest that social networks have no significant impact on becoming entrepreneurs for returnees but matter for non-migrants. |
| Keywords: | entrepreneurship; savings; selection; social capital |
| JEL: | L26 O12 O15 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7552&r=soc |
| By: | Kim, Young Chul |
| Abstract: | The quality of one's social network significantly affects his economic success. Even after the skill acquisition period, the social network influences economic success through various routes such as mentoring, job searching, business connections, or information channeling. In this paper I propose that a social network externality which extends beyond the education period -- what I call a Lifetime Network Externality -- is important in explaining the evolution of between-group inequality in an economy. When the members of a group believe that the quality of their social network will be better in the future, more young group members invest in skill achievement because they expect higher returns on investment realized over the working period. As this is repeated in the following generations, the quality of the group's network improves over time. Combining the Lifetime Network Externality, which operates during the labor market phase of a worker's career, with the traditional concepts of peer and parental effects, which operate during the educational phase (Loury 1977), I suggest a full dynamic picture of group inequality in an economy with multiple social groups. I define a notion of Network Trap, wherein a disadvantaged group cannot improve the quality of its network without a governmental intervention, and I explore the egalitarian policies to mobilize the group out of this trap. This social capital approach suggests a positive effect of equality on economic growth in later stages of economic development and a positive effect of inequality in the early stage of economic development, consistent with Galor and Zeira (1993). Unlike the previous literature, the conclusion is derived without imposing the standard assumption of credit market imperfections. Therefore, this implies that equality, by helping disadvantaged groups to move out of the network trap, has a positive effect on economic development even in a matured economy without binding credit constraints, or in a society with public provision of schooling. |
| Keywords: | Lifetime Network Externality; Group Inequality; Network Trap; Social Capital; Economic Development |
| JEL: | D63 J60 J15 D85 J70 |
| Date: | 2009–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:18767&r=soc |
| By: | Angelucci, Manuela; De Giorgi, Giacomo; Rangel, Marcos A.; Rasul, Imran |
| Abstract: | This paper documents how the structure of extended family networks in rural Mexico relates to the poverty and inequality of the village of residence. Using the Hispanic naming convention, we construct within-village extended family networks in 504 poor rural villages. Family networks are larger (both in the number of members and as a share of the village population) and out-migration is lower the poorer and the less unequal the village of residence. Our results are consistent with the extended family being a source of informal insurance to its members. |
| Keywords: | extended family network; migration; village inequality; village marginality |
| JEL: | J12 O12 O17 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7496&r=soc |
| By: | Dessí, Roberta; Piccolo, Salvatore |
| Abstract: | Local merchant guilds were ubiquitous in medieval Europe, and their development was inextricably linked with the development of towns and the rise of the merchant class. We develop a theory of the emergence of local merchant guilds as an efficient mechanism to implement collusion among merchants and rulers, building on the natural complementarity between merchants' market trading and mutual monitoring. Our model explains the main observed features of local merchant guilds' behavior, their rules and internal organization, including membership restrictions and exclusion, and their relationship with rulers. Moreover, it identifies the main channels through which the guilds' social capital influenced their ability to collude with rulers, and hence social welfare. As we show, the available historical evidence supports our theory, shedding new light on the role of the guilds' social capital. We then extend the model to analyze the key trade-offs faced by rulers in choosing whether to grant recognition to one or multiple guilds. This provides an additional rationale for the establishment of the alien merchant guilds first analyzed by Greif, Milgrom and Weingast (1994), helping us to understand the observed distribution of guilds and their characteristics. |
| Keywords: | collusion; merchant guild; political economy; social capital; taxation.; trade |
| JEL: | H2 L4 N4 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7374&r=soc |
| By: | Adolfo Morrone; Noemi Tontoranelli; Giulia Ranuzzi |
| Abstract: | This paper investigates the notion and role of trust in modern societies as a first step towards the construction of indicators that could better inform our understanding of societal progress. Trust is commonly viewed as a proxy indicator of social capital, and a high level of trust is considered a factor that can enhance economic growth and social well-being. Indicators of trust inform about the quality of people’s interactions with others, hence on their assessment of the extent to which other people in the community are perceived as potential partners rather than as rivals. The paper, starting from the various notions and theories of trust provided in literature, discusses different definitions of trust, its various dimensions (i.e. interpersonal and institutional trust), their relation to the broader notion of social capital, and the different factors that affect it. It then overviews the measures currently used to assess trust, discussing their advantages and disadvantages. Questions assessing the degree of trust of respondents towards other people and institutions have been asked in dozens of large-scale surveys worldwide, and these data highlight systematic relations between trust and various dimensions of economic and social well-being. The paper concludes by noting the limits of available evidence and the scope for improvements through better survey design and more comparable survey questions. |
| Date: | 2009–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stdaaa:2009/3-en&r=soc |
| By: | König, Michael; Tessone, Claudio J.; Zenou, Yves |
| Abstract: | In order to understand the different characteristics observed in real-world networks, one needs to analyze how and why networks form, the impact of network structure on agents' outcomes, and the evolution of networks over time. For this purpose, we combine a network game introduced by Ballester et al. (2006), where the Nash equilibrium action of each agent is proportional to her Bonacich centrality, with an endogenous network formation process. Links are formed on the basis of agents' centrality while the network is exposed to a volatile environment introducing interruptions in the connections between agents. A remarkable feature of our dynamic network formation process is that, at each period of time, the network is a nested split graph. This graph has very nice mathematical properties and are relatively easy to characterize. We show that there exists a unique stationary network (which is a nested split graph) whose topological properties completely match features exhibited by real-world networks. We also find that there exists a sharp transition in efficiency and network density from highly centralized to decentralized networks. |
| Keywords: | Bonacich centrality; nested split graphs; network formation; social interactions |
| JEL: | A14 C63 D85 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7521&r=soc |
| By: | Denisova, Irina; Eller, Markus; Zhuravskaya, Ekaterina |
| Abstract: | We use data from the 2006 round of the Russian Longitudinal Monitoring Survey (RLMS) to describe perceptions of the Russian population about the transition process and the role of the state compared to that of free markets. We find that about one half of Russian population is disappointed with transition and a large majority is in favor of high state regulation and state provision of goods and services. High demand for government regulation and increased state intervention coexists with a low level of trust in government institutions and recognition of high and rising levels of corruption. The findings are consistent with the theory developed by Aghion et al. (2009). In an environment with poor social capital, private business imposes negative externalities on the society and society chooses to demand more state regulation and tolerate corruption in order to reduce these externalities. We also find that individual perceptions of social capital and corruption co-vary with the demand for regulation, as predicted by the theory. |
| Keywords: | perceptions; regulation; Russia; transition; trust |
| JEL: | P20 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7492&r=soc |
| By: | Markus Knell (Oesterreichische Nationalbank, Economic Studies Division, Otto-Wagner Platz 3, POB 61, A-1011 Vienna); Helmut Stix (Oesterreichische Nationalbank) |
| Abstract: | Trust in financial institutions is of great importance for financial intermediation. Against this background, we study two questions: Has trust in banks declined during the global financial crisis and what factors determine the level of trust in banks? Employing survey evidence from Austrian households, we show that trust in banks is mainly affected by "subjective" variables like the individuals' assessment of the current economic and financial situation and by their future outlooks. After controlling for these variables we show that the financial crisis has caused a reduction in trust (around -7.5pp) which is sizable but not dramatic. Even at its lowest point (in the first quarter of 2009) 65% still report to have trust in the banking system, which is a higher percentage than for many other institutions. Furthermore, the drop is only slightly larger than the drop observed after a small, non-systemic crisis that occurred in 2006. Thus, the much-stressed notion of a genuine "trust crisis" is not reflected in our data. Finally, we provide evidence that the degree of individual information does not influence trust, that banking trust is contagious and that the extension of deposit insurance coverage in October 2008 had a positive effect on trust. |
| Keywords: | Trust, Banking Sector, Financial Crisis |
| JEL: | G21 Z13 O16 |
| Date: | 2009–11–10 |
| URL: | http://d.repec.org/n?u=RePEc:onb:oenbwp:158&r=soc |
| By: | Brügger, Beatrix; Lalive, Rafael; Zweimüller, Josef |
| Abstract: | This paper studies the role of culture in shaping unemployment outcomes. The empirical analysis is based on local comparisons across a language barrier in Switzerland. This Röstigraben seperates cultural groups, but neither labor markets nor political jurisdictions. Local contrasts across the language border identify the role of culture for unemployment. Our findings indicate that differences in culture explain differences in unemployment duration on the order of 20 %. Moreover, we find that horizontal transmission of culture is more important than vertical transmission of culture and that culture is about as important as strong changes to the benefit duration. |
| Keywords: | cultural transmission; culture; regional unemployment; unemployment duration |
| JEL: | J21 J64 Z10 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7405&r=soc |