In this issue we feature 13 current papers on the theme of social capital, chosen by Fabio Sabatini (Università degli Studi di Roma “La Sapienza”):

1. Social Groups and the Effectiveness of Protests Marco Battaglini; Rebecca B. Morton; Eleonora Patacchini

2. Divided We Stay Home: Social Distancing and Ethnic Diversity Georgy Egorov; Ruben Enikolopov; Alexey Makarin; Maria Petrova

3. Political History, Fiscal Compliance and Cooperation: Medieval Social Contracts and their Legacy Buonanno, Paolo; Cervellati, Matteo; Lazzaroni, Sara; Prarolo, Giovanni

4. Hiding Behind the Veil of Ashes: Social Capital in the Wake of Natural Disasters Victor Stéphane

5. Occupational mismatch and network effects: Evidence from France Arnaud Herault

6. Peer Effects in Networks: a Survey Bramoullé, Yann; Djebbari, Habiba; Fortin, Bernard

7. Trust and Trustworthiness After Negative Random Shocks Hernán Bejarano; Joris Gillet; Ismael Rodriguez-Lara

8. Riding out of a financial crisis: The joint effect of trust and corporate ownership Mario Daniele Amore; Mircea Epure

1. Social Groups and the Effectiveness of Protests Marco Battaglini; Rebecca B. Morton; Eleonora Patacchini (Division of Social Science)

We present an informational theory of public protests, according to which public protests allow citizens to aggregate privately dispersed information and signal it to the policy maker. The model predicts that information sharing of signals within social groups can facilitate information aggregation when the social groups are sufficiently large even when it is not predicted with individual signals. We use experiments in the laboratory and on Amazon Mechanical Turk to test these predictions. We find that information sharing in social groups significantly affects citizens' protest decisions and as a consequence mitigates the effects of high conflict, leading to greater efficiency in policy makers' choices. Our experiments highlight that social media can play an important role in protests beyond simply a way in which citizens can coordinate their actions; and indeed that the information aggregation and the coordination motives behind public protests are intimately connected and cannot be conceptually separated. Date: 2020–02 URL: http://d.repec.org/n?u=RePEc:nad:wpaper:20200039&r=soc

2. Divided We Stay Home: Social Distancing and Ethnic Diversity Georgy Egorov (Northwestern University–Kellogg School of Management and NBER); Ruben Enikolopov (New Economic School, ICREA-UPF, Barcelona IPEG, and Barcelona GSE); Alexey Makarin (EIEF and CEPR); Maria Petrova (ICREA-UPF, Barcelona IPEG, Barcelona GSE, and New Economic School)

Voluntary social distancing plays a vital role in containing the spread of the disease during a pandemic. As a public good, it should be more commonplace in more homogeneous and altruistic societies. However, for healthy people, observing social distancing has private benefits, too. If sick individuals are more likely to stay home, healthy ones have fewer incentives to do so, especially if the asymptomatic transmission is perceived to be unlikely. Theoretically, we show that this interplay may lead to a stricter observance of social distancing in more diverse and less altruistic societies. Empirically, we find that, consistent with the model, the reduction in mobility following the first local case of COVID-19 was stronger in Russian cities with higher ethnic fractionalization and cities with higher levels of xenophobia. For identification, we predict the timing of the first case using pre-existing patterns of internal migration to Moscow. Using SafeGraph data on mobility patterns, we confirm that mobility reduction in the United States was also higher in counties with higher ethnic fractionalization. Our findings highlight the importance of strategic incentives of different population groups for the effectiveness of public policy. Date: 2020 URL: http://d.repec.org/n?u=RePEc:eie:wpaper:2016&r=soc

3. Political History, Fiscal Compliance and Cooperation: Medieval Social Contracts and their Legacy Buonanno, Paolo; Cervellati, Matteo; Lazzaroni, Sara; Prarolo, Giovanni

We study the long-shadow of local political history for socio-economic outcomes and attitudes today. Following historical evidence on medieval communal and maritime republics, we conceptualize more inclusive and exploitative social contracts as resulting from the interplay between the different incentives of ruling elites and the behavior of the population at large. Tracking the emergence, territorial evolution and disappearance of each polity in pre-industrial Italy, we measure the intensity of exposure to different republics over time and the number of changes in the identity of rulers (i.e. political stability) in each municipality. Looking within territories ever ruled by the republics, we find that a longer exposure to communal polities increases fiscal compliance, while the forceful annexation to the rule of maritime republics and higher political instability reduce it. Contribution to public goods go hand-in-hand with fiscal policies and is positively associated to generalized morality (organ donations) but crowds-out private mutual help. Political history also shapes population diversity today in line with evidence on differently attractive historical legal regulations. The results are robust to extensive checks and are confirmed using local variation in distance to centers of power and to the changing network of polities in instrumental variable regressions. Findings suggest that historical political instability and selected migration are reinforcing mechanisms of historical persistence of multiple social contracts until today. Keywords: Fiscal Compliance; Medieval Republics; population diversity; Social Contracts Date: 2019–12 URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:14214&r=soc

4. Hiding Behind the Veil of Ashes: Social Capital in the Wake of Natural Disasters Victor Stéphane (Univ. Lyon, UJM Saint-Etienne, GATE UMR 5824, F-42023 Saint-Etienne, France)

This paper investigates the impact of natural disasters on social capital. By heterogeneously affecting people in a community, natural disasters create a temporary information asymmetry on their post-disaster income. Using an original dataset collected in rural Ecuador, we provide suggestive evidence that households use this asymmetric information to pretend to be poorer than they actually are, in order to escape from solidarity mechanisms in the aftermath of the shock. The magnitude of this effect decreases with the level of wealth inequality in the community and vanishes in the most unequal communities where bilateral cooperation is rather fostered. JEL: D71 O12 Q54 D82 Keywords: Social Capital, Moral Hazard, Asymmetric Information, Volcanic Eruptions, Ecuador Date: 2021 URL: http://d.repec.org/n?u=RePEc:gat:wpaper:2021&r=soc

5. Occupational mismatch and network effects: Evidence from France Arnaud Herault (GRANEM - Groupe de Recherche Angevin en Economie et Management - UA - Université d'Angers - AGROCAMPUS OUEST - Institut National de l'Horticulture et du Paysage)

How does the social environment of immigrants influence the probability of being in an occupational mismatch situation? To answer this question, we use the Labor Force Survey (2005-2012) to assess the impact of peers and the neighborhood on the use of referees to find a job on the one hand, and the probability of being in occupational mismatch situation on the other hand. With a probit model, we estimate the probability of using a referee to find a job as well as the probability of being in an occupational mismatch situation for immigrants. Endogeneity is controlled with a recursive bivariate probit model for the use of a referee to find a job and the probability of being in an occupational mismatch situation. The results show that the neighborhood effect has a greater effect than the peer effect on using referees to find a job. Moreover, the role of the referee on the probability of being in an occupational mismatch situation is not homogeneous according to the origins. Keywords: Neighborhood,labor market,networks,immigration,Occupational mismatch Date: 2019–06–06 URL: http://d.repec.org/n?u=RePEc:hal:journl:hal-02860040&r=soc

6. Peer Effects in Networks: a Survey Bramoullé, Yann; Djebbari, Habiba; Fortin, Bernard We survey the recent, fast-growing literature on peer effects in networks.

An important recurring theme is that the causal identification of peer effects depends on the structure of the network itself. In the absence of correlated effects, the reflection problem is generally solved by network interactions even in non-linear, heterogeneous models. By contrast, microfoundations are generally not identified. We discuss and assess the various approaches developed by economists to account for correlated effects and network endogeneity in particular. We classify these approaches in four broad categories: random peers, random shocks, structural endogeneity and panel data. We review an emerging literature relaxing the assumption that the network is perfectly known. Throughout, we provide a critical reading of the existing literature and identify important gaps and directions for future research. Keywords: identification; networks; peer effects Date: 2019–12 URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:14260&r=soc

7. Trust and Trustworthiness After Negative Random Shocks Hernán Bejarano (Center of Economics Research and Teaching (CIDE); Economic Science Institute (ESI), Chapman University); Joris Gillet (Middlesex University, Business School); Ismael Rodriguez-Lara (Universidad de Granada, Departamento de Teoría e Historia Económica)

We investigate experimentally the effect of a negative endowment shock in a trust game to assess whether different causes of inequality have different effects on trust and trustworthiness. In our trust game there may be inequality in favor of the second mover and this may (or may not) be the result of a negative random shock (i.e., the outcome of a die roll) that decreases the endowment of the firstmover. Our findings suggest that inequality leads to differences in behavior. First-movers send more of their endowment and second-movers return more when there is inequality. However, we do not find support for the hypothesis that the cause of the inequality matters. Behavior after the occurrence of a random shock is not significantly different from the behavior when the inequality exists from the outset. Our results highlight that we have to be cautious when interpreting the effects on trust and trustworthiness of negative random shocks that occur in the field (e.g., natural disasters). Our results suggest that these effects are largely driven by the inequality caused by the shock and not by any of the additional characteristics of the shock like saliency or uncertainty. JEL: C91 D02 D03 D69 Keywords: Trust Game; Endowment Heterogeneity; Random Shocks; Inequality Aversion; Experimental Economics Date: 2020 URL: http://d.repec.org/n?u=RePEc:chu:wpaper:20-25&r=soc

8. Riding out of a financial crisis: The joint effect of trust and corporate ownership Mario Daniele Amore; Mircea Epure

We study how generalized trust shapes the ability of firms with different ownership forms to obtain trade financing and perform during a financial crisis. Exploiting geographic variations in trust across Italian regions and the occurrence of the 2008-09 financial crisis in a difference-indifferences setting, we show that generalized trust makes family firms less able to obtain trade financing during the crisis. This finding maps into performance results: trust alleviates the negative effect of a crisis for non-family firms, while it aggravates the negative effect for family firms. This latter result depends crucially on a firm’s corporate governance: trust does not harm family firms whose board is open to non-family directors. Collectively, our findings illustrate how culture interacts with corporate attributes in shaping a firm’s prospects. JEL: G32 G34 Z10 Keywords: trust, trade financing, Family firms, financial crisis, performance Date: 2020–07 URL: http://d.repec.org/n?u=RePEc:upf:upfgen:1733&r=soc

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