nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2015‒07‒18
nine papers chosen by
Fabio Sabatini
Università degli Studi di Roma “La Sapienza”

  1. Urban Spatial Structure, Employment and Social Ties: European versus American Cities By Picard, Pierre M.; Zenou, Yves
  2. Networked Politics: Political Cycles and Instability under Social Influences By Diffo Lambo, Lawrence; Pongou, Roland; Tchantcho, Bertrand; Wambo, Pierre
  3. The effect of opportunistic behavior on trust: An experimental approach By Romero, Christina; Wollni, Meike
  4. Networks and the Macroeconomy: An Empirical Exploration By Daron Acemoglu; Ufuk Akcigit; William Kerr
  5. Worker Reciprocity and the Returns to Training: Evidence from a Field Experiment By Sauermann, Jan
  6. Economic and Political Networks and Firm Openness: Evidence from Indonesia By SHIMAMOTO Daichi; TODO Yasuyuki
  7. Group Size and Social Interaction: a Canada-US Comparison of Interracial Marriage By Hou, Feng; Myles, John; Schimmele, Christoph; Wu, Zheng
  8. Networks in Manuel Castells’ theory of the network society By Anttiroiko, Ari-Veikko
  9. Social network effects on mobile money adoption in Uganda By Murendo, Conrad; Wollni, Meike; de Brauw, Alan; Mugabi, Nicholas

  1. By: Picard, Pierre M. (University of Luxembourg); Zenou, Yves (Stockholm University)
    Abstract: We develop a model where workers both choose their residential location (geographical space) and their social interactions (social space). In equilibrium, we show under which condition some individuals reside close to the job center while others live far away from it. Even though the two populations have the same characteristics and no group experiences any discrimination, we show that the majority group always has a lower unemployment rate than the minority group both when ethnic minorities reside close and far away from the city-center where jobs are located. This is because they have a larger and better-quality social network. This result is quite unique as it can explain the high unemployment rates of ethnic minorities both in European and American cities.
    Keywords: social interactions, segregation, labor market, spatial mismatch, network size
    JEL: A14 J15 R14 Z13
    Date: 2015–07
  2. By: Diffo Lambo, Lawrence; Pongou, Roland; Tchantcho, Bertrand; Wambo, Pierre
    Abstract: Media, opinion leaders, co-ethnics, family members, and friends influence our political decisions. The ways in which these influences affect political cycles and (in)stability has been understudied. We propose a model of a networked political economy, where agents' choices are partly determined by the opinions of the individuals with whom they are connected in a fixed influence network. The model features two types of individuals: ideological individuals who never change their views and who seek to influence the rest of the society; and non-ideological individuals who have no political allegiance and do not influence anybody, but who can be influenced by ideological individuals with whom they are connected. We show that influence networks increase political turnout and cause non-ideological individuals who are subject to antagonistic influences to keep changing their political views. This in turn increases political cycles and instability in two ways: (1) by reducing the number of stable and popular political leaders; and (2) by worsening the tradeoff between political competition and the existence of a stable leader. We uncover a necessary and sufficient condition that characterizes all of the political technologies and network structures that guarantee political stability. This condition introduces a preference-blind stability index, which maps each pair of a constitution and an influence network into the maximum number of competing political leaders that a society can afford while remaining stable regardless of the extent of preference heterogeneity in its population. Our findings have testable implications for different societies. They shed light on the network origins of political cycles in two-party systems. They also imply that individualist societies are more politically stable than collectivist societies and societies organized around ethnic groups or characterized by a high level of homophilous behavior and influences. For ethnic democracies, we quantify the exact tradeoff between political competition and stability, and show that ethnic fragmentation increases stability. This latter finding further provides a rationale for using the "divide and rule" strategy to maintain political power. Finally, we find that cliques and multi-layer cliques maximize the competition-stability tradeoff, whereas star networks, lines and rings minimize it.
    Keywords: Political cycles, instability, influence networks, homophily, ethnic democracy, competition-stability tradeoff.
    JEL: C0 C7 D7 D8 D85 H0 O1
    Date: 2015–06–01
  3. By: Romero, Christina; Wollni, Meike
    Abstract: Linking small farmers to global markets through contract farming has become an important policy recommendation aiming to increase farmers’ income and foster rural development. Nevertheless, some of the arrangements involving small farmers have been reported to loose participants or collapse over time. Trust is an informal institution that can discourage opportunism and facilitate the compliance of contracts in a setting with an expensive and weak legal system. Nevertheless, the study of trust has been addressed mostly in lab experiments, but in the agribusiness context it has been addressed only by a few authors in a rather descriptive way. We use a framed field experiment with prior signaling on a sample of 180 small broccoli farmers in the highlands of Ecuador to explore the effect of opportunistic behavior on small farmers´ trust. The results reveal that this group of farmers has lower than average trust towards unknown people. Furthermore, we use a signal that mimics the payment of a loan by the B partner as treatment in the predesigned trust game. Results show that a positive signal increases trust, but a negative signal has no effect on it. Reacting slowly to external negative signs can threaten individuals who will not protect themselves towards opportunism. If farmers do not react quickly enough, they might face larger losses and will not be able to stay in business. In addition, if informal norms include weak sanctions, contract farming will be less likely and individuals will prefer the spot market were only one-time exchanges take place.
    Keywords: small farmers, trust, experiments, signaling, delay on payment, Institutional and Behavioral Economics, D02, Q13,
    Date: 2015–06
  4. By: Daron Acemoglu; Ufuk Akcigit; William Kerr
    Abstract: The propagation of macroeconomic shocks through input-output and geographic networks can be a powerful driver of macroeconomic fluctuations. We first exposit that in the presence of Cobb-Douglas production functions and consumer preferences, there is a specific pattern of economic transmission whereby demand-side shocks propagate upstream (to input-supplying industries) and supply-side shocks propagate downstream (to customer industries) and that there is a tight relationship between the direct impact of a shock and the magnitudes of the downstream and the upstream indirect effects. We then investigate the short-run propagation of four different types of industry-level shocks: two demand-side ones (the exogenous component of the variation in industry imports from China and changes in federal spending) and two supply-side ones (TFP shocks and variation in knowledge/ideas coming from foreign patenting). In each case, we find substantial propagation of these shocks through the input-output network, with a pattern broadly consistent with theory. Quantitatively, the network-based propagation is larger than the direct effects of the shocks. We also show quantitatively large effects from the geographic network, capturing the fact that the local propagation of a shock to an industry will fall more heavily on other industries that tend to collocate with it across local markets. Our results suggest that the transmission of various different types of shocks through economic networks and industry interlinkages could have first-order implications for the macroeconomy.
    JEL: E32
    Date: 2015–07
  5. By: Sauermann, Jan (SOFI, Stockholm University)
    Abstract: Workers' reciprocal behavior is one argument used to explain why firms invest in employee human capital. We explore the relation between firm-sponsored training and reciprocity by providing evidence that workers reciprocate employer training investments by making greater effort. Using a field experiment with random assignment to a training program, we show that reciprocal workers have significantly higher performance than their non-reciprocal peers after participation in the training course. This result suggests that reciprocal workers exert greater effort in response to the firm's investment.
    Keywords: firm-sponsored training, reciprocity, field experiment
    JEL: J24 M53 D01
    Date: 2015–07
  6. By: SHIMAMOTO Daichi; TODO Yasuyuki
    Abstract: Using firm-level dataset from the manufacturing sector in Indonesia, we examine how firms' ties with the government in receiving rents and with other firms and their managers' trust toward foreigners and views of globalization are correlated with each other. We find that firms' strong political ties are associated positively with the level of managers' trust toward domestic citizens and the number of domestic buyers and suppliers and negatively with their level of trust toward foreign nationals. In turn, managers' trust toward foreign nationals and firms' transactions with foreign firms are positively correlated with each other, and trust and business networks within the country also show a positive correlation. When managers are more trusting of domestic citizens or when firms transact more with domestic firms, managers are more likely to have a negative view of globalization, incorporating such factors as the foreign ownership of firms and free trade. The results suggest a vicious cycle between the political ties of local firms and protectionist views and policies against globalization, which leads to economic stagnation due to a lack of diffusion of knowledge from abroad. This mechanism may explain why middle-income countries experience economic stagnation and cannot escape the "middle-income trap."
    Date: 2015–07
  7. By: Hou, Feng; Myles, John; Schimmele, Christoph; Wu, Zheng
    Abstract: While black-white intermarriage is uncommon in the United States, blacks in Canada are just as likely to marry whites as to marry blacks. Asians, in contrast, are more likely to marry whites in the US than in Canada. We test the claim that high rates of interracial marriage are indicative of high levels of social integration against Peter Blau’s ‘macrostructural’ thesis that relative group size is the key to explaining differences in intermarriage rates across marriage markets. Using micro-data drawn from the American Community Survey and the Canadian Census, we demonstrate that the relative size of racial groups accounts for over two-thirds of the US-Canada difference in black-white unions and largely explains the cross-country difference in Asian-white unions. Under broadly similar social and economic conditions, a large enough difference in relative group size can become the predominant determinant of group differences in the prevalence of interracial unions.
    Keywords: intermarriage; macrostructural theory; social integration; group size
    JEL: J12 Z13
    Date: 2015–07–07
  8. By: Anttiroiko, Ari-Veikko
    Abstract: This paper discusses the conceptualization of network in Manuel Castells’ theory of network society. Castells’ early academic works were built on the structural analysis of capitalism and social movements in response to the contradictions of capitalist society, without any explicit connection to network analysis. Networks gradually appeared in Castells’ works in the late 1980s, when he became interested in the configuration of the relationships between technology, economy, and society. The culmination of this phase was his opus magnum, The Information Age trilogy, which introduced network as a key concept of his macro theory, even though he remained laconic about the concept itself. This is paradoxical, for Castells became possibly the most prominent figure globally in adopting network terminology in macro sociological theory, but at the same time made hardly any empirical, theoretical or methodological contribution to social network analysis or network theory in general. This implies that ‘network’ in Castells’ social theory is not an analytical concept but rather a powerful metaphor that served to capture his idea of the new social morphology of late capitalism.
    Keywords: Manuel Castells, network, network society, The Information Age, social theory, political economy, capitalist society, late capitalism, informational city, social morphology
    JEL: A13 A14 B31 B51 B52 H11 H7 I0 J6 L16 L23 L5 O1 O2 O3 O33 P1 P16
    Date: 2015–07–15
  9. By: Murendo, Conrad; Wollni, Meike; de Brauw, Alan; Mugabi, Nicholas
    Abstract: Social networks play a vital role in generating social learning and information exchange that can drive the diffusion of new financial innovations. This is articularly relevant for developing countries where education, extension and financial information services are underprovided. The recent introduction of mobile money in Africa represents a case where imperfect financial markets, weak extension services and information asymmetries limit the ability of rural households to make informed decisions to take advantage of mobile money innovation. This article identifies the role of social networks in the adoption of mobile money in Uganda. Using data from a survey of 477 rural households, a probit model is estimated controlling for household characteristics, correlated effects, and other possible information sources. Results suggest that learning within social networks helps disseminate information about mobile money and has enhanced its adoption. Compared to poor households, non-poor households rely more on social networks for information about mobile money. Mobile money adoption is likely to be enhanced if promotion programs reach more social networks.
    Keywords: social networks, mobile money, adoption, Uganda, International Development, Research and Development/Tech Change/Emerging Technologies, D14, D83, O33, Q12,
    Date: 2015–02

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