nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2013‒02‒16
eleven papers chosen by
Fabio Sabatini
Universita' la Sapienza

  1. Does social capital matter for European regional growth? By Jesús Peiró-Palomino; Anabel Forte Deltell
  2. Social Distance and Trust: Experimental Evidence from a Slum in Cairo By Binzel, Christine; Fehr, Dietmar
  3. Unfavorable Land Endowment, Cooperation, and Reversal of Fortune By Litina, Anastasia
  4. University spinoffs and the 'performance premium' By Czarnitzki, Dirk; Rammer, Christian; Toole, Andrew A.
  5. On the role of endowment heterogeneity and ambiguity for conditional cooperation By Felix Ebeling
  6. The Impact of Social Networks on Labour Market Outcomes: New Evidence from Cape Breton By Adnan Q. Khan; Steven F. Lehrer
  7. The Effect of Adult Criminals’ Spillovers On the Likelihood of Youths Becoming Criminals By Carlos Medina; Jorge Andrés Tamayo; Christian Posso
  8. A Theory of Cooperation through Social Division, with Evidence from Nepal By Choy, James
  9. Discrimination or Social Networks? Industrial Investment in Colonial India By Gupta, Bishnupriya
  10. Exposure to Television and Individual Beliefs: Evidence from a Natural Experiment By Tanja Hennighausen
  11. SOCIAL NORMS AND FIRMS’ DISCRIMINATORY PAY-SETTING By Simon Janssen; Simone N. Tuor Sartore; Uschi Backes-Gellner

  1. By: Jesús Peiró-Palomino (Department of Economics, Universitat Jaume I, Castellón, Spain); Anabel Forte Deltell (Department of Economics, Universitat Jaume I, Castellón, Spain)
    Abstract: This article analyzes the role of different elements of social capital in economic growth for a sample of 85 European regions during the period 1995 - 2008. Much has been said about social capital in the last two decades, but studies for the European regional context are scant, and those analyzing periods after the nineties are nonexistent. The improvements in data availability allow us to consider the traditionally disregarded Central and Eastern European regions. This is especially interesting, since they are all transition economies that recently joined to the European Union and show remarkably low levels of social capital. Additionally, we follow the Bayesian paradigm, which not only allows us to make direct inference on the parameters to be estimated, but also deals with parameter uncertainty, leading to a deeper understanding of the data. Contrary to other contributions for the European context, results suggest, among other findings, that trust and social norms might have the major implications for regional growth, whereas the role of active participation in groups does not seem to be so well defined.
    Keywords: Social capital, economic growth, European regions, Bayesian inference
    JEL: C15 R10 Z13
    Date: 2013
  2. By: Binzel, Christine (University of Heidelberg); Fehr, Dietmar (WZB - Social Science Research Center Berlin)
    Abstract: While strong social ties help individuals cope with missing institutions, trade is essentially limited to those who are part of the social network. We examine what makes the decision to trust a stranger different from the decision to trust a member of a given social network (a friend), by comparing the determinants of these two decisions for the same individual. We implement a binary trust game with hidden action in a lab-in-the-field experiment with residents of an informal housing area in Cairo. Our results show that trust is higher among friends than among strangers and that higher trust among friends is related to the principal's belief of trustworthiness. However, on average a principal underestimates her friend's trustworthiness leading to inefficient outcomes. Our findings suggest that even within a social network, trade may often be limited to exchanges with few information asymmetries.
    Keywords: trust, social distance, hidden action, solidarity, economic development
    JEL: C72 C93 D82 O12
    Date: 2013–01
  3. By: Litina, Anastasia (University of Luxembourg)
    Abstract: This research advances the hypothesis that reversal of fortunes in the process of economic development can be traced to the effect of natural land productivity on the desirable level of cooperation in the agricultural sector. In early stages of development, unfavorable land endowment enhanced the economic incentive for cooperation in the creation of agricultural infrastructure that could mitigate the adverse effect of the natural environment. Nevertheless, despite the benefcial effects of cooperation on the intensive margin of agriculture, low land productivity countries lagged behind during the agricultural stage of development. However, as cooperation, and its persistent effect on social capital, have become increasingly important in the process of industrialization, the transition from agriculture to industry among unfavorable land endowment economies was expedited, permitting those economies that lagged behind in the agricultural stage of development, to overtake the high land productivity economies in the industrial stage of development. Exploiting exogenous sources of variations in land productivity across countries the research further explores the testable predictions of the theory. It establishes that: (i) reversal of fortunes in the process of development can be traced to variation in natural land productivity across countries. Economies characterized by favorable land endowment dominated the world economy in the agricultural stage of development but were overtaken in the process of industrialization; (ii) lower level of land productivity in the past is associated with higher levels of contemporary social capital; (iii) cooperation, as reflected by agricultural infrastructure, emerged primarily in places were land was not highly productive and collective action could have diminished the adverse effects of the environment and enhance agricultural output.
    Keywords: Land productivity, Cooperation, Social Capital, Trust, Economic development, Agriculture, Industrialization
    Date: 2013
  4. By: Czarnitzki, Dirk; Rammer, Christian; Toole, Andrew A.
    Abstract: The creation of spinoff companies is often promoted as a desirable mechanism for transferring knowledge and technologies from research organizations to the private sector for commercialization. In the promotion process, policymakers typically treat these 'university' spinoffs like industry startups. However, when university spinoffs involve an employment transition by a researcher out of the not-for-profit sector, the creation of a university spinoff is likely to impose a higher social cost than the creation of an industry startup. To offset this higher social cost, university spinoffs must produce a larger stream of social benefits than industry startups, a performance premium. This paper outlines the arguments why the social costs of entrepreneurship are likely to be higher for academic entrepreneurs and empirically investigates the existence of a performance premium using a sample of German startup companies. We find that university spinoffs exhibit a performance premium of 3.4 percentage points higher employment growth over industry startups. The analysis also shows that the performance premium varies across types of academic entrepreneurs and founders' academic disciplines. --
    Keywords: Academic Entrepreneurship,Startups,Firm performance,Technology Transfer,Open Science,University Spinoff Policy,Human Capital,Social Capital
    JEL: L25 L26 J24
    Date: 2013
  5. By: Felix Ebeling
    Abstract: Conditional cooperation (CC) is one of the most persistent behaviors in charitable giving. The laboratory experiment presented in this paper is designed to explore two questions: First, whether heterogeneous endowments of donors affect conditional cooperative giving. Second, whether potential donors exploit ambiguity about other donors’ endowments in a self-serving manner to justify lower giving. We find that heterogeneous endowments affect giving in a way that suggests individuals concern for equality of donors’ earnings after giving. Furthermore, the results do not confirm the exploitation of ambiguity about other donors’ endowments. Individuals do not bias beliefs about other donors’ endowments in a self-serving manner to justify lower giving.
    Keywords: public good, donation, conditional cooperation, social norms, ambiguity
    JEL: C91 D63 H41
    Date: 2013–02–05
  6. By: Adnan Q. Khan; Steven F. Lehrer
    Abstract: Debates centered on the role of social networks as a determinant of labour market outcomes have a long history in economics and sociology; however, determining causality remains a challenge. In this study we use information on random assignment to a unique intervention to identify the impact of changes in the size of alternative social network measures on subsequent employment at both the individual and community level. Our results indicate that being assigned to the treatment protocol significantly increased the size of social networks, particularly weak ties. Nevertheless, these increases did not translate into improved employment outcomes 18 months following study completion. We do not find any evidence of treatment effect heterogeneity based on the initial size of one's social network; but those whose strong ties increased at a higher rate during the experiment were significantly less likely to hold a job following the experiment. We find that many of these results also hold at the community level among those who did not directly participate in the intervention. In summary, our results suggest that policies can successfully influence the size of an individual's social network, but these increases have limited impacts on long run labour market outcomes with the notable exception of changes in the composition of individuals who hold jobs.
    JEL: C93 J08
    Date: 2013–02
  7. By: Carlos Medina; Jorge Andrés Tamayo; Christian Posso
    Abstract: We use a unique data set at the individual level to estimate an empirical model explaining the probability of young individuals to become criminals as a function of the presence of adult criminals in their neighborhoods, an a complete set of control variables, including census sector fixed effects. We use the census of criminals captured in Medellín between 2000 and 2010 to construct our peer’s variables, and find a strong and robust positive effect of the presence of adult criminal neighbors on the probability of becoming criminal. The result is robust across different specifications of the presence of criminals, and with respect to the probability of committing different types of crimes, even controlling for contextual and group effects. Both modeling peer effects as the sum of friends’ efforts and modeling them as deviations from the means, affect the likelihood to become criminal, although with differential importance by type of crime.
    Keywords: Crime, Social Interactions. Classification JEL: C31, K40, K42
    Date: 2013–02
  8. By: Choy, James (University of Warwick)
    Abstract: Informal, kin-based groups play an important role in developing country economies. I point out two facts: communities are divided into smaller groups, and many groups prohibit interactions with outsiders. These facts are rationalized in a model in which division of the community into non-interacting groups allows agents to support higher levels of cooperation. Group segregation is sustained in equilibrium through a reputation eect. I test the empirical implication that there should be less cooperation between members of groups that make up a larger percentage of their communities. I discuss implications for underinvestment in education, misallocation of resources, and institutional change.
    Keywords: Cooperation, Caste, Social Institution
    Date: 2013
  9. By: Gupta, Bishnupriya (University of Warwick)
    Abstract: Industrial investment in Colonial India was segregated by the export oriented industries, such as tea and jute that relied on British firms and the import substituting cotton textile industry that was dominated by Indian firms. The literature emphasizes discrimination against Indian capital. Instead informational factors played an important role. British entrepreneurs knew the export markets and the Indian entrepreneurs were familiar with the local markets. The divergent flows of entrepreneurship can be explained by the comparative advantage enjoyed by social groups in information and the role of social networks in determining entry and creating separate spheres of industrial investment.
    Date: 2013
  10. By: Tanja Hennighausen
    Abstract: Does the information provided by mass media have the power to persistently affect individual beliefs about the drivers of success in life? To answer this question empirically, this contribution exploits a natural experiment on the reception of West German television in the former German Democratic Republic. After identifying the impact of Western television on individual beliefs and attitudes in the late 1980s, longitudinal data from the German Socio-Economic Panel is used to test the persistence of the television effect on individual beliefs during the 1990s. The empirical findings indicate that Western television exposure has made East Germans more inclined to believe that effort rather than luck determines success in life. Furthermore, this effect still persists several years after the German reunification.
    Keywords: media, beliefs, East Germany, SOEP
    JEL: D78 D83 H89 P39
    Date: 2013
  11. By: Simon Janssen (Department of Business Administration (IBW), University of Zurich); Simone N. Tuor Sartore (Department of Business Administration (IBW), University of Zurich); Uschi Backes-Gellner (Department of Business Administration (IBW), University of Zurich)
    Abstract: We analyze the relationship between gender-specific social norms and firms’ pay-setting behavior. We combine information about regional voting behavior relative to gender equality laws, as a measure for gender-specific social norms, with a large data set of multi-branch firms and workers. The results show that multi-branch firms pay more discriminatory wages in branches located in regions with a higher social acceptance of gender inequality than in branches located in regions with a lower acceptance. Voter approval rates account for about 50% of the entire variation of within-firm gender pay gaps across regions. By investigating a subsample of performance pay workers for whom we are able to observe their time-based and performance pay component separately, we show that unobserved productivity differences within firms across regions cannot explain the relationship between social norms and within-firm gender pay gaps. As performance pay is more closely related to workers’ productivity than time-based pay, gender-specific productivity differences would manifest in the workers’ performance pay component. However, as the relationship between social norms and within-firm gender pay gaps manifests only for the time-based pay component but not for the performance pay component of the same workers, unobserved gender-specific productivity differences cannot explain our findings. The results support a strong relationship between social norms and the discriminatory pay-setting behavior of firms.
    JEL: J31 J33 J71 M5
    Date: 2013–01

This nep-soc issue is ©2013 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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