WANG Chunchao firstname.lastname@example.org
Social capital and economic development
? ? ?
What is social capital? Social capital and economic development The role of social capital in labor markets
social capital and migrants’ wages
What is Social Capital?
Some core dimensions
networks social norms social trust
Baker (1990) Bourdieu (1986)
Definition of Social Capital
A resource that actors derive from specific social structures and then use to pursue their interests The aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance or recognition
Coleman A resource for action embodied in relations among (1988) persons, which emerges from closure in the social Putnam (1995) Burt (1992)
structure and is convertible to other forms of capital. Features of social organization such as networks, norms, and social trust that facilitate coordination and cooperation for mutual benefit.
Friends, colleagues, and more general contacts through whom you receive opportunities to use your financial and human capital
Definition of Social Capital
conceptualized social capital as "(1) quantity and/or quality of resources an actor can access or use through; (2) its location in a social network."
Social capital is related with resources concerning trust, reciprocity and network etc.
My views on Social Capital
Beneficial social network resource with trust, norms and reciprocity, which can be sorted by social linking ways into the following two types: “Bonding”: social network that based on the “geo ties” or “relative ties” eg. Close relatives, village fellows “Bridging”: Newly bridged social network that based on “Bridging diverse social circle” eg. Newly Homogeneous friends, and peers, etc.
from repeated interpersonal interaction
from general knowledge about the population of agents, the incentives they face, and the upbringing they have received eg. invoicing for goods they have delivered. Generalized trust yields more efficient outcomes than personalized trust.
Social trust (continued)
eg. Interpersonal trust in the systems of mails. Systematic trust for banking systems.
Social trust and public goods provision Delivering public goods via voluntary organizations depends critically on local trust and leadership in the community.
Social capital and development
The absence of social capital represents one of the major impediments to economic development (Controversial) Case1. Italy. Northern Italy developed faster than Southern Italy because the former was better endowed in social capital -measured by membership in groups and clubs. facilitate the solution of collective action problems. Case2. U.S. Putnam (2000), focusing on the U.S. experience since the 1950's, argues social capital, defined as membership in formal and informal clubs, has declined monotonically since the 1950’s. No relationship between the speed of the decline of social capital and economic performance across U.S. states or across time periods.
Social capital and migrants
Income, especially wage
Identification and satisfaction
The role of social capital to the behavior of migration and urbanization
Migrant workers local workers
Migrate to seek jobs Rural laborer
Mechanism of social capital determining wage
INFORMATION EFFECT PRODUCTIVITY EFFECT
“Bonding”: Information effect (-)
E2 Eo E1 Ld Ld’
Labor market efficiency effect (+) “Bridging”: Productivity effect(+)
Efficiency effect (Peer pressure)
“Bonding”: Information effect (－); Efficiency effect in labor markets (+) Total effect of “Bonding” is (+) or (－) ? Basically(+) “Bridging”: Productivity effect (+) Total effect is (+)
More than 262 million rural-urban migrants in the end of 2012.
Data source: NBSC,2013
Background in China
Population of migrant workers has been increasing. The Wages are ascending. ? Divides between the migrants and the locals. Social status divides Economic status divides ? The average wage of migrant workers is much lower than that of the local workers.
China Now Has the Third Highest Labor Costs in Emerging Asia
Wage Comparison between the migrant and the average worker
Ratio of wage for migrant worker to average worker
1 0.8 0.6 0.4 0.2 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Data source: The wages of migrant workers are from the rural survey team of NBSC, and the wages of average workers are from the NBSC.
How to interpret this trend? Possible Determinants
Individual characteristics (Relatively stable) age, Gender, Marital status, … Human capital (Diminishing effects, Cai, 2011) education (Training), Health … Institutional factors (short-run Labor Law) Minimum wage regulation, labor protection, … Social capital
The role of Social capital in increasing wage of ruralurban migrant workers
（1）Non-significant (weak) effects:
Zhang and Lu, 2009
Knight and Yueh, 2008…
（3）Heterogeneous social capital has positive effect to the wage
Homogeneous social capital has no positive effect to the wage
My views on the above controversies
Definition and classification of social capital Ye and Zhou（2010）: Original; New number of schoolmates、number of relatives with Beijing Hukou, Introduction through relatives and friends（Original）； ration of expenditure for gathering with friends to total income, gathering, sending gifts（New） Zhang and Lu（2009）： sending gifts et al. My views on classification: “Bonding” and “Bridging”
Which sort of social capital has a larger improvement effect to the wage? Bonding vs. Bridging Surveying samples and estimating approaches are various Ordered dependent variable Why choose this sort of variable: (1) Trying to get exact various income source. eg. bonus, subsidy, accommodation funds included in wage or not. (2) Trying to relax interviewees
4 cities of the Pearl River Delta in China
July-August, 2010. Survey in Guangzhou, Dongguan, Shenzhen, Zhuhai. The four cities attracted the largest number of migrant workers working within the whole China. 1,339 migrant workers were interviewed, of which 1,034 responses were effective, indicating a ratio of over 77% effective questionnaires.
Survey location: Guangzhou, Dongguan, Shenzhen, Zhuhai
Ordered Model with Sample Selection Sample selection 29 samples Semiparametric estimation Non-normality distribution for disturbing item Dependent variable Ordered Variable (0, 1500]; (1500,2000]; (2000, 2500]; (2500, + ∞) Independent variable Feature of individual, household, human capital, external institution
?0, ?1, ? y=? ?2, ? ?3,
if 0 < inc ≤ 1.5 if 1.5 < inc ≤ 2 if 2 < inc ≤ 2.5 if inc > 2.5.
The wage (in 1000 yuan) of an individual is observed in the ordered categories 0, 1, 2 and 3 with banded data. Two reasons for designing this ordered variable
: wage y order 0 (wage<1.5); 1 (1.5<wage≤2); 2 (2<wage≤2.5); 3 (wage>2.5) (1000 yuan) Guangdong 1 if the individual is from Guangdong province; 0, otherwise. 1 if the individual is from the provinces Adjacent contiguous to Guangdong; 0, otherwise. 1 if the individual is from the provinces in South southern China except those contiguous to Guangdong; 0, otherwise. 1 if the individual is from the provinces in North northern China; 0, otherwise. findjob0 1 if the job is found by self; 0, otherwise. 1 if the job is introduced by a relative or findjob1 friend; 0, otherwise. 1 if the job is introduced by the government; findjob2 0, otherwise. 1 if the job is obtained from the labor findjob3 market; 0, otherwise.
“bondi ng” social capital
Continued Table Definition of variables
“bridgi ng” social capit al
relation1 1 if relationship of the worker and other local workers in the factory is “friendly”; 0, otherwise. 1 if relationship of the worker and other local workers in the factory is “average”; 0, otherwise. 1 if relationship of the worker and other local workers in the factory is “not familiar with each other”; 0, otherwise. 1 if relationship of the worker and other local workers in the factory is “never contact”; 0, otherwise. 1 there is a labor union in the company or factory where the worker works; 0, otherwise. baseline: relation4
Table Estimation Results of the Ordered Wage Models
Ordered-p Parametric Ordered-p with Selection coeff. est p-value 0.152 0.525* 0.348* 0.042 -0.104 -0.087 0.433*** 0.310 0.073 0.084 0.152 0.000 0.004 0.617 0.685 0.424 0.069 0.186 0.771 0.382 Semiparametric Ordered-p with Selection coeff. est p-value 0.122 0.470* 0.292** 0.042 -0.114 -0.066 0.700* 0.581* 0.344 0.097 0.226 0.000 0.013 0.603 0.647 0.530 0.001 0.005 0.116 0.298
adjacent south north findjob1 findjob2 findjob3 relation1 relation2 relation3 union
coeff. est 0.159 0.522* 0.330* 0.042 -0.106 -0.097 0.437** * 0.314 0.073 0.089
p-value 0.134 0.000 0.006 0.617 0.684 0.379 0.071 0.189 0.776 0.359
Note: * =1% significant; ** =5% significant; *** =10% significant.
Table Average Marginal Probability Effects: Semiparametric Estimation
wage bands below 1500 0 ME adjacent south north findjob1 findjob2 findjob3 relation1 relation2 relation3 -0.045 -0.161* -0.103* -0.016 0.043 0.024 -0.238* -0.213* 0.118*** p-value 0.229 0.000 0.009 0.603 0.655 0.541 0.000 0.004 0.084 ME 0.004 -0.006 0.001 0.002 -0.007 -0.003 -0.008 0.024 -0.006 (1500,2000] 1 p-value 0.497 0.744 0.936 0.651 0.740 0.636 0.799 0.329 0.792 ME 0.023 0.086* 0.054** 0.008 -0.021 -0.012 0.124* 0.106* 0.063*** (2000,2500] 2 p-value 0.232 0.000 0.011 0.603 0.645 0.537 0.000 0.003 0.095 ME 0.017 0.082* 0.047** 0.006 -0.015 -0.009 0.121* 0.083* 0.060 above 2500 3 pvalue 0.240 0.001 0.032 0.604 0.617 0.523 0.007 0.008 0.196
Note: * =1% significant; ** =5% significant; *** =10% significant. Controlling for Individual characteristics, Human capital, Institutional features.
Robustness and Endogeneity
Consistency of results using Parametric Estimation & Semiparametric Estimation
(1) There is no literature on how to solve the endogeneity problem of ordered probit semiparametric estimation with sample selection model currently (2) Weak endogeneity
My research conclusions
Social capital is important for migrants to earn a high level of wage. ? Both the “bridging” and the “bonding” social capital have significantly positive effects on the wage of migrant workers. ? But the former has a larger effect in upgrading the wage than the latter does.
Concluding remarks and policy implications
Social capital plays a complicated role to economic performance and community development. Constructing harmonious and friendly enterpriseinternal social relationship has positive contributions to the improvement of wages. Enhancement of urban community harmonization should be beneficial for migrants to expand their social ties from “bonding” to “bridging.