nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2013‒09‒26
twelve papers chosen by
Fabio Sabatini
Universita' la Sapienza

  1. Formal Institutions and the Trust Formation Process: A Psychological Approach to Explain the Relationship between Institutions and Interpersonal Trust By Tamilina, Larysa; Tamilina, Natalya
  2. Natural disasters and social capital formation: The impact of the Great Hanshin-Awaji earthquake By Eiji Yamamura
  3. Social capital, product imitation and growth with learning externalities By Agenor, Pierre-Richard; Dinh, Hinh T.
  4. Is there a closure penalty? Cohesive network structures, diversity, and gender inequalities in career advancement By Lutter, Mark
  5. The Value of Social Networks in Financial Markets By Michela Rancan
  6. Macroeconomic imbalances: a question of trust? By Buetzer, Sascha; Jordan, Christina; Stracca, Livio
  7. Discrimination or Social Networks? Industrial Investment in Colonial India By Gupta, Bishnupriya
  8. When Strong Ties are Strong: Networks and Youth Labor Market Entry By Kramarz, Francis; Nordström Skans, Oskar
  9. Observed Punishment Spillover Effects: A Laboratory Investigation of Behavior in a Social Dilemma. By David L. Dickinson; E. Glenn Dutcher; Cortney S. Rodet
  10. Favor Trading in Public Good Provision By Petrie, Ragan; Jacobson, Sarah
  11. Exploitation, Altruism, and Social Welfare: An Economic Exploration By Doepke, Matthias
  12. Peer Groups, Employment Status and Mental Well-being among Older Adults in Ireland By Hudson, Eibhlin; Barrett, Alan

  1. By: Tamilina, Larysa; Tamilina, Natalya
    Abstract: While formal institutions are recognized as having an effect on trust formation, no theoretical or empirical models exist to formalize this relationship. This study introduces a new conceptual framework to explain trust building by individuals and the role that formal rules and laws may play in this process. Drawing on a social-cognitive theory of psychology, we present trust as composed of internal, interpersonal, and external components with the latter encompassing formal institutions. We further demonstrate that there are three mechanisms – sanction, legitimacy, and autonomy – through which formal institutions may affect trust levels either directly or indirectly. These propositions are tested empirically based on the European Social Survey data (2004) by using a variety of statistical techniques. Our empirical analysis demonstrates evidence of heterogeneity in institutional effects on trust, suggesting that the autonomy dimension of the institutional framework is particularly important for trust formation processes.
    Keywords: interpersonal trust, formal institutions, social-cognitive psychology, heterogeneity, trust formation process
    JEL: K42 Z10 Z13
    Date: 2013–06–01
  2. By: Eiji Yamamura
    Abstract: The Great Hanshin-Awaji (Kobe) earthquake struck Japan in 1995, causing devastating damage to the economic landscape of south-central Japan. The earthquake also caused people to realize the importance of social capital in Japan. Based on a large, individual-level database comprising 488,223 observations, this study investigated how, and the extent to which, the earthquake enhanced the investment in social capital through participation in community activity. The differences-in-differences method was used, and the following key findings were obtained: (1) In Japan, people were more likely to invest in social capital in 1996 than in 1991, (2) the effects of the earthquake decreased as the distance of one’s place of residence increased from Kobe, and (3) the earthquake significantly increased the social capital investment rate of Kobe residents, whereas it had no significant influence on the investment rate of residents of large cities close to Kobe.
    Keywords: Natural disasters, social capital, volunteer activities.
    JEL: N35 Q54 Z13
    Date: 2013–09–10
  3. By: Agenor, Pierre-Richard; Dinh, Hinh T.
    Abstract: Links between social capital, human capital, and product imitation are studied in an overlapping generations model of endogenous growth where the key benefit of social capital is to promote imitation. There is also a two-way interaction between imitation and human capital. Building social capital (which brings direct utility) requires time. Because life expectancy is endogenously related to human capital, time allocation between market work and social capital accumulation is also endogenously determined. Social capital accumulation depends also on access to infrastructure. The model is calibrated numerically for a low-income country. A policy that helps to promote social capital accumulation may be very effective to foster economic growth, even if it involves offsetting cuts in other productive components of government spending, such as education outlays or infrastructure investment. Offsetting cuts in infrastructure investment, however, may be less effective.
    Keywords: Political Economy,Economic Theory&Research,Debt Markets,Social Capital,Emerging Markets
    Date: 2013–09–01
  4. By: Lutter, Mark
    Abstract: That social capital matters is an established fact in the social sciences. How different forms of social capital affect gender disadvantages in career advancement is less clear, however. Qualitative research suggests that women face disadvantages in project-based labor markets where recruitment practices are based on informal and personal networks. Focusing on a project-based type of labor market, namely the U.S. film industry, this study argues that women suffer from social closure and face severe career disadvantages when collaborating in cohesive teams. At the same time, gender disadvantages are reduced for women who build social capital in open networks with a higher degree of diversity and information flow. I test and demonstrate these assumptions using a large-scale longitudinal dataset containing full career profiles of more than 1.2 million performances by 101,090 film actors in 483,949 feature film productions between the years 1900-2010. In particular, I analyze career survival models and interaction effects between gender and different measures of social capital and information openness. The findings reveal that female actors have a higher risk of career failure than their male colleagues when affiliated in cohesive networks, but have better survival chances when embedded in open and diverse structures. This study contributes to the understanding of how and what type of social capital can be either a beneficial resource for otherwise disadvantaged groups or a constraining mechanism that intensifies gender differences in career advancement. -- Sozialkapital stellt insbesondere auf projektorientierten Arbeitsmärkten eine wichtige Erfolgsressource dar. Auf die Frage, wie verschiedene Formen der sozialen Einbettung auf geschlechtsspezifische Erfolgsungleichheiten wirken, gibt es jedoch bislang keine eindeutige Antwort. Bisherige Einzelfalluntersuchungen legen nahe, dass Frauen besonders dann benachteiligt sind, wenn Rekrutierungspraktiken in hohem Maße auf informellen und auf persönlichen Netzwerken beruhen. Am Beispiel eines projektorientierten und durch informelle Rekrutierung gekennzeichneten Winner-take-all-Arbeitsmarktes - der US-Filmbranche - wird argumentiert, dass Frauen besonders dann Benachteiligungen erfahren, wenn sie ihre Karriere häufiger in engmaschigen, stark kohäsiven Teams aufbauen. Dagegen können sie Benachteiligungen deutlich reduzieren, wenn sie sich häufiger in Projektteams bewegen, die sich durch offene Netzwerkstrukturen und breite Erfahrungshintergründe auszeichnen. Auf Basis von Ereignisdatenanalysen und der Untersuchung vollständiger Karriereprofile von 101.090 US-Filmschauspielern in 483.949 Spielfilmproduktionen mit mehr als 1,2 Millionen Engagements testet der Beitrag diese Argumentation und zeigt - anhand diverser Indikatoren zur Messung von Teamkohäsion, Kollaborationshäufigkeit, Informationszugang und -vielfalt -, dass kohäsive Netze geschlechtsspezifische Karriereungleichheiten verstärken, während offene Netzwerke Benachteiligungen deutlich reduzieren. Vermutlich sind der in diesen Netzen höhere Informationsfluss und vor allem die Diversität der geteilten Informationen entscheidende Faktoren, die geschlechtstypische Benachteiligungen aufheben können. Diese Studie erweitert das Verständnis darüber, wie und unter welchen Bedingungen Sozialkapital zu einer vorteilhaften Ressource für benachteiligte Gruppen wird, und wann es beschränkende, Benachteiligungen intensivierende Wirkungen entfaltet.
    Date: 2013
  5. By: Michela Rancan
    Abstract: Social contacts influence decisions and economic outputs in a variety of contexts. Does social network matter also in financial markets? In this paper I investigate the effect of social networks on mutual funds performance by exploiting data on the education of U.S. fund managers. The results show that performance is better for fund managers with many social connections. Furthermore, positional advantages in the social network generate superior performance. This evidence suggests that social interaction and information spillovers have a positive and meaningful value for mutual funds.
    Keywords: Social Network, Mutual Fund, Performance
    JEL: G23 L14
    Date: 2013–03
  6. By: Buetzer, Sascha; Jordan, Christina; Stracca, Livio
    Abstract: In this paper, we address the question of whether cross-country differences in civic capital, notably interpersonal trust, have contributed to the build-up of macroeconomic imbalances over the last three decades. We analyse the link between a stylised index of economic imbalances (a combination of the government budget balance, the inflation rate and the current account balance) and interpersonal trust, alongside other measures of civic and cultural capital, obtained from value survey data for 65 advanced and emerging countries. For the whole set of countries, we find robust empirical evidence for a negative and significant relationship between trust and macroeconomic imbalances which may therefore partly reflect underlying heterogeneity in civic capital. Within the euro area, differences in trust exist although they are not particularly large from an international perspective. With the nexus between trust and macroeonomic imbalances being equally robust we can attribute one fifth of the variation in intra-euro area imbalances to differences in interpersonal trust. Euro area membership and EU fiscal rules do not appear to have weakened the link between the two variables. JEL Classification: F33, F42, Z1
    Keywords: culture, euro area, Macroeconomic imbalances, Trust
    Date: 2013–08
  7. By: Gupta, Bishnupriya (Department of Economics, 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. JEL classification: JEL codes:
    Date: 2013
  8. By: Kramarz, Francis; Nordström Skans, Oskar
    Abstract: The conditions under which young workers find their first real post-graduation jobs are both very important for the young’ future careers and insufficiently documented given their potential importance for young workers welfare. To study these conditions, and in particular the role played by social ties, we use a Swedish population-wide linked employer-employee data set of graduates from all levels of schooling which includes detailed information on family ties, neighborhoods, schools, class composition, and parents’ and children’ employers over a period covering years with both high and low unemployment, together with measures of firm performance. We find that strong social ties (parents) are an important determinant for where young workers find their first job. The effects are larger if the graduate’s position is “weak” (low education, bad grades), during high unemployment years, and when information on potential openings are likely to be scarce. On the hiring side, by contrast, the effects are larger if the parent’s position is “strong” (long tenure, high wage) and if the parent’s plant is more productive. The youths appear to benefit from the use of strong social ties through faster access to jobs and by better labor market outcomes as measured a few years after entry. In particular, workers finding their entry jobs through strong social ties are considerably more likely to remain in this job, while experiencing better wage growth than other entrants in the same plant. Firms also appear to benefit from these wage costs (relative to comparable entrants) starting at a lower base. They also benefit on the parents’ side; parents’ wage growth drops dramatically exactly at the entry of one of their children in the plant, although this is a moment when firm profits tend to be growing. Indeed, the firm-side benefits appear large enough for (at least small) firms to increase job creation at the entry level in years when a child of one of their employees graduates.
    Keywords: network; strong tie; youth employment
    JEL: J30
    Date: 2013–09
  9. By: David L. Dickinson; E. Glenn Dutcher; Cortney S. Rodet
    Abstract: Punishment has been shown to be an effective reinforcement mechanism. Intentional or not, punishment will likely generate spillover effects that extend beyond one’s immediate decision environment, and these spillovers are not as well understood. We seek to understand these secondary spillover effects in a controlled lab setting using a standard social dilemma: the voluntary contributions mechanism. We find that spillovers occur when others observe punishment outside their own social dilemma. However, the direction of the spillover effect depends crucially on personal punishment history and whether one is personally exempt from punishment or not. Key Words: Punishment, Punishment Spillovers, Vicarious Punishment, VCM, Social Dilemma, Experiment
    JEL: C91 C92 D03 H40 J24 K42
    Date: 2013
  10. By: Petrie, Ragan (Interdisciplinary Center for Economic Science (ICES), George Mason University, 4400 University Drive, MSN 1B2); Jacobson, Sarah (Department of Economics, Williams College, 24 Hopkins Hall Dr., Williamstown, MA 01267, USA)
    Abstract: Favor trading is common. We do something nice for someone and they do something nice in return. Several motives might underlie such behavior, including altruism, strategic motives, and direct or indirect positive reciprocity. It is not yet well-understood how these fit together to affect behavior, how they interact in various institutional structures, and how they play out over time. We use a laboratory experiment to study the elements and dynamics of favor trading in a particular setting: the private provision of a public good. In our experiment, giving subjects the ability to practice targeted reciprocity by making a simple, low-cost change in information provision increases contributions to the public good by 14%. Subjects reward group members who have previously been generous to them and withhold rewards from ungenerous group members. Strategic concerns cannot explain all of this behavior, and it must be at least partly due to direct reciprocity. When someone cannot directly benefit from favor trading, he gives much less to the public good. People thus excluded from the “circle of reciprocity” provide a clean and strict test of indirect reciprocity. Contrary to previous studies in the literature, we do not observe indirect reciprocity.
    Keywords: public goods, direct and indirect reciprocity, experiment, peer-to-peer fundraising
    JEL: C92 H41 D01
    Date: 2013–09
  11. By: Doepke, Matthias
    Abstract: Child labor is often condemned as a form of exploitation. I explore how the notion of exploitation, as used in everyday language, can be made precise in economic models of child labor. Exploitation is defined relative to a specific social welfare function. I first show that under the standard dynastic social welfare function, which is commonly applied to intergenerational models, child labor is never exploitative. In contrast, under an inclusive welfare function, which places additional weight on the welfare of children, child labor is always exploitative. Neither welfare function captures the more gradual distinctions that common usage of the term exploitation allows. I resolve this conflict by introducing a welfare function with minimum altruism, in which child labor in a given family is judged relative to a specific social standard. Under this criterion, child labor is exploitative only in families where the parent (or guardian) displays insufficient altruism towards the child. I argue that this welfare function best captures the conventional concept of exploitation and has useful properties for informing political choices regarding child labor.
    Keywords: altruism; child labor; exploitation; social welfare function
    JEL: D63 D64 J10 J47 J80
    Date: 2013–06
  12. By: Hudson, Eibhlin (Trinity College Dublin); Barrett, Alan (ESRI, Dublin)
    Abstract: Research has shown that employment status, such as being unemployed or retired, can be related to well-being. In addition, the direction and size of these relationships can be influenced by the employment status of one's peer group. For example, it has been shown that the well-being of the unemployed tends to be higher for those living in high-unemployment areas compared to the unemployed living in low-unemployment areas. In this paper, we explore whether such employment peer effects impact upon the well-being of older workers. This is an important issue in the context of promoting longer working lives. If the well-being of older people in employment is lowered by low employment levels in their peer group, then sustaining high employment among older workers will be more difficult. We use data from the Irish Longitudinal Study on Ageing (TILDA) which is a nationally representative sample of people aged fifty and over and living in Ireland, collected between 2009 and 2011. Employment peer effects are proxied using the peer group non-employment rate where a peer is defined as someone in the same age-group and region and of the same gender. We find that for the employed, an increase in peer non-employment is associated with an increase in reported depressive symptoms, whereas for those not employed such an increase is associated with a decrease in reported depressive symptoms. However, these findings hold mainly for men.
    Keywords: peer groups, well-being, older adults
    JEL: I10 J26 C21
    Date: 2013–08

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