In this issue we feature 10 current papers on the theme of social capital:

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In this issue we have:

1.  How Social Networks Shape Our Beliefs: A Natural Experiment among Future French Politicians - Yann Algan; Quoc-Anh Do; Nicolò Dalvit; Alexis Le Chapelain; Yves Zenou
2.  Trust, Well-Being and Growth: New Evidence and Policy Implications - Yann Algan; Pierre Cahuc
3.  The Influence of Trust and Knowledge Sharing on Virtual Team Effectiveness - Thomas, Ted
4.  Trust and the Welfare State: the Twin Peaks Curve - Yann Algan; Pierre Cahuc; Marc Sangnier
5.  Are human and social capital linked? Evidence from India' - Baris Alpaslan
6.  Two-sided Altruism and Signaling - Garance Genicot
7.  Political Connections and Firm Value: Evidence from the Regression Discontinuity Design of Close Gubernatorial Elections - Quoc-Anh Do; Yen-Teik Lee; Bang Dang Nguyen
8.  Lying in public good games with and without punishment - Bernd Irlenbusch; Janna Ter Meer
9.  Isolated Capital Cities, Accountability and Corruption: Evidence from US States - Filipe R. Campante; Quoc-Anh Do
10. Capital Cities, Conflict, and Misgovernance: Theory and Evidence - Filipe R. Campante; Quoc-Anh Do; Bernardo Guimaraes

 1. How Social Networks Shape Our Beliefs: A Natural Experiment among Future

     French Politicians

    Yann Algan (Département d'économie)

    Quoc-Anh Do (Département d'économie)

    Nicolò Dalvit (Departement d'Economie de Sciences Po, LIEPP)

    Alexis Le Chapelain (Département d'économie)

    Yves Zenou (Research Institute of Industrial Economics)  This paper shows how a public policy shapes convergence of beliefs through  newly-formed social networks, with a focus on political opinion. We use a  unique natural experiment that randomly assigns students into first-year  groups at a French college that forms future top politicians. Pairs of  students in the same group are much more likely to become friends. The  randomized group membership serves as instrumental variable in a dyadic  regression of differences in beliefs on friendship. We find that students’

 political opinions converge particularly strongly between friends, reaching  11% of a standard deviation only after 6 months. Convergence is strongest  among pairs least likely to become friends without the randomized exposure,  or friends whose characteristics are the most different. While there is  evidence of homophily in network formation, it does not seem to affect the  estimates of convergence, except among very similar friends. The same  strategy shows that a longer network distance implies slower convergence.

    Keywords: Political Beliefs; Peers; Social Networks; Convergence;

     Homophily; Belief Transmission; Learning; Diffusion; Natural Experiment

    JEL: C93 D72 Z13

URL: http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/78vacv4udu92eq3fec89svm9uv&r=soc

 2. Trust, Well-Being and Growth: New Evidence and Policy Implications

    Yann Algan (Département d'économie)

    Pierre Cahuc (Department of Economics)  This survey reviews the recent research on trust, institutions, and economic  development. It discusses the various measures of trust and documents the  substantial heterogeneity of trust across space and time. The conceptual  mechanisms that explain the influence of trust on economic performance and  the methods employed to identify the causal impact of trust on economic  performance are reviewed. We document the mechanisms of interactions between  trust and economic development in the realms of finance, innovation, the  organization of firms, the labor market, and the product market. The last  part reviews recent progress to identify how institutions and policies can  affect trust.

    Keywords: Trust; Growth; Economic Development; Institutions; Well-being

    JEL: O11 O43 Z13

URL: http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/33o86cn6qp83dot08iir97915s&r=soc

 3. The Influence of Trust and Knowledge Sharing on Virtual Team Effectiveness

    Thomas, Ted

 Virtual teams are a growing response to increased de-centralisation and  globalization, and the need for organizations to adapt to an ever changing  and complex work environment. Their growing prevalence reflects many  different factors, including the increased global reach of many  organizations, changing workforce demographics, and heightened competitive  pressures requiring greater organizational flexibility and responsiveness.

 This phenomenon has grown rapidly in recent years through advancements and  greater access to technologies for communication and collaboration.

 Organizations however are being challenged with understanding what makes  these virtual teams effective and how to measure the achievement of such  effectiveness. Combined with the convergence of telephony and data  technologies this has enabled voice and video to be delivered ‘on demand’ at  a far more affordable price to the end consumer. With the added dynamic of  ‘mobile’ becoming such a pervasive technology, this is providing the fuel  driving the establishment of greater numbers of virtual teams. We now live in  an increasingly “connected world” and with the blurring of work and leisure  time, for many, virtual teams have already or are becoming a natural  extension of the workplace. Individuals are demanding personal flexibility in  the management of their time and space and this is matched by organizations  seeking flexibility to scale resources in meeting changing demand. Virtual  teams may also be seen as a response to satisfying changing social and  organizational aspirations. A range of factors are seen as contributing to  the effectiveness of virtual teams and these include technology, trust,  sharing of knowledge, empowerment and leadership. This study focuses on trust  as a primary factor in achieving virtual team effectiveness, and assesses the  significance of trust and the sharing of knowledge amongst team members.

 Trust determines how people work together, listen to one another, and build  effective relationships. When people believe that they are working for  trustworthy organizations, they are willing to invest their time and talents  in making a difference in an organization. People who feel more connected  will invest more of themselves in their work. High trust levels lead to a  greater sense of self responsibility, greater interpersonal insight, and more  collective action toward achieving common goals. However, with a lack of  face-to-face contact, trust based on performance substitutes for trust based  on social interaction. Trust is a cornerstone to achieving virtual team  effectiveness and from an organizational perspective this highlights the need  for regular communication with team members to reinforce the culture and  values of the organization. In the age of the knowledge economy, knowledge is  seen as a critical resource for competitive advantage. The willingness of  team members to share knowledge with others on the team can be attributed to  the strength of the trust relationship and this further enhances virtual team  effectiveness. The challenges for organizations are to understand what level  of trust exists across the team, how this impacts on team effectiveness and  to be able to apply interventions when seeking to increase team  effectiveness. Active and regular communications programmes, internal  marketing campaigns and short surveys are approaches for developing and  enhancing the trust relationship. Organizations that are unwilling or unable  to use virtual teams may find themselves losing out in an increasingly  competitive and rapidly changing global economic and social environment. The  technology and communication advances are clear, yet enabling effective  participation and team collaboration is a more complex problem.

    Keywords: Virtual team effectiveness, Knowledge sharing, Trust,

URL: http://d.repec.org/n?u=RePEc:vuw:vuwmba:4562&r=soc

 4. Trust and the Welfare State: the Twin Peaks Curve

    Yann Algan (Département d'économie)

    Pierre Cahuc (Department of Economics)

    Marc Sangnier (Aix-Marseille School of Economics)  We show the existence of a twin peaks relation between trust and the size of  the welfare state that stems from two opposing forces. Uncivic people support  large welfare states because they expect to benefit from them without bearing  their costs. But civic individuals support generous benefits and high taxes  only when they are surrounded by trustworthy individuals. We provide  empirical evidence for these behaviors and this twin peaks relation in the  OECD countries.

    Keywords: Welfare State; Trust; Civism; Corruption; Redistribution

    JEL: H1 Z1

URL: http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/sarckf9a387pq4m0ti31l8n9q&r=soc

 5. 'Are human and social capital linked? Evidence from India'

    Baris Alpaslan

 This paper develops a two-period Overlapping Generations (OLG) model of  endogenous growth in which a two-way relationship between social capital and  human capital is studied. In order to illustrate the impact of public  policies, the model is calibrated using the data for a low-income country,  India and a sensitivity analysis is reported under di¤erent parameter  con...gurations. Based on the numerical analysis, this paper focuses on  possible trade-offs in the allocation of government spending between two  productive components, that is, social capital-related activities and  education. The results of this paper show that a higher share of spending on  education promotes growth despite an offsetting cut in social capital-related  activities; however, the reverse entails trade-o¤s. In other words, an  increase in the share of spending on social capital-related activities  through a concomitant cut in education is detrimental to long-run growth.

URL: http://d.repec.org/n?u=RePEc:man:cgbcrp:207&r=soc

 6. Two-sided Altruism and Signaling

    Garance Genicot

 This paper shows that when donors and recipients care about each other  --two-sided altruism -- the presence of asymmetry of information about the  donor's income leads very naturally to a signaling game. A donor who cares  about the recipient's welfare has incentives to appear richer than he is when  the recipient cares about him. Similarly, asymmetry of information regarding  the donor's income generates a signaling game in the presence of two-sided  altruism. These signaling games put upward pressure on transfers and this  pressure increases with the altruism of the recipient.

    JEL: D64 F24 O15 O16

URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:21309&r=soc

 7. Political Connections and Firm Value: Evidence from the Regression

     Discontinuity Design of Close Gubernatorial Elections

    Quoc-Anh Do (Département d'économie)

    Yen-Teik Lee (Singapore Management University)

    Bang Dang Nguyen (University of Cambridge)  Using the regression discontinuity design of close gubernatorial elections in  the U.S., we identify a significant and positive impact of the social  networks of corporate directors and politicians on firm value. Firms  connected to elected governors increase their value by 3.89%. Political  connections are more valuable for firms connected to winning challengers, for  smaller and financially dependent firms, in more corrupt states, in states of  connected firms’ headquarters and operations, and in closer, smaller, and  active networks. Post-election, firms connected to the winner receive  significantly more state procurement contracts and invest more than do firms  connected to the loser.

    Keywords: Close Gubernatorial Election; Corruption; Firm Value; Political

     Connection; Procurement; Regression Discontinuity Design; Social Nteworks

    JEL: D72 D73 G28 G30 G34 G38 H57

URL: http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/65rged1j6o9gl9jvp8a09o3eue&r=soc

 8. Lying in public good games with and without punishment

    Bernd Irlenbusch (University of Cologne)

    Janna Ter Meer (University of Cologne)  We experimentally study a frequently observed public good setting where  accurate contribution feedback is not available and group members can send  non-verifiable cheap talk messages about their contributions. As feedback,  subjects receive only announced contributions or the announced or actual  contribution with 50% probability. In this setting, we explore both  information transmission and reception as well as the effectiveness of costly  peer punishment. Overall, we find that cooperation breaks down in all  announcement treatments except when actual contribution feedback is provided  some of the time and punishment is available. We identify various constraints  to full cooperation relative to the standard public good game. First,  subjects make errors in adjusting their beliefs for the announcements of  others and, on average, adjust their beliefs downward for a given  announcement. Second, we find that significantly more punishment is assigned  to high contributors compared to the standard public good game. Furthermore,  punishment for low contributors appears to have a smaller disciplining  effect. When actual contribution information is provided some of the time we  find that these constraints are less severe compared to the setting where  only announcements are available.

    Keywords: public goods, punishment, lying, credibility, communication

    JEL: C92 D03 H41 D02

URL: http://d.repec.org/n?u=RePEc:cgr:cgsser:06-02&r=soc

 9. Isolated Capital Cities, Accountability and Corruption: Evidence from US

     States

    Filipe R. Campante (Harvard University)

    Quoc-Anh Do (Département d'économie)  We show that isolated capital cities are robustly associated with greater  levels of corruption across US states, in line with the view that this  isolation reduces accountability. We then provide direct evidence that the  spatial distribution of population relative to the capital affects different  accountability mechanisms: newspapers cover state politics more when readers  are closer to the capital, voters who live far from the capital are less  knowledgeable and interested in state politics, and they turn out less in  state elections. We also find that isolated capitals are associated with more  money in state-level campaigns, and worse public good provision.

    Keywords: Isolated Capital Cities; Corruption; Accountability; US states

    JEL: D72 D73 H41 H83 K42

URL: http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/4tc33icveb94nokk2rd2ettg0k&r=soc

10. Capital Cities, Conflict, and Misgovernance: Theory and Evidence

    Filipe R. Campante (Harvard University)

    Quoc-Anh Do (Département d'économie)

    Bernardo Guimaraes (Sao Paulo School of Economics)  Motivated by a novel stylized fact - countries with isolated capital cities  display worse quality of governance - we provide a framework of endogenous  institutional choice based on the idea that elites are constrained by the  threat of rebellion, and that this threat is rendered less effective by  distance from the seat of political power. In established democracies, the  threat of insurgencies is not a binding constraint, and the model predicts no  correlation between isolated capitals and misgovernance. In contrast, a  correlation emerges in equilibrium in the case of autocracies. Causality runs  both ways: broader power sharing (associated with better governance) means  that any rents have to be shared more broadly, hence the elite has less of an  incentive to protect its position by isolating the capital city; conversely,  a more isolated capital city allows the elite to appropriate a larger share  of output, so the costs of better governance for the elite, in terms of rents  that would have to be shared, are larger. We show evidence that this pattern  holds true robustly in the data. We also show that isolated capitals are  associated with less power sharing, a larger income premium enjoyed by  capital city inhabitants, and lower levels of military spending by ruling  elites, as predicted by the theory.

    Keywords: Capital Cities; Governance; Institutions; Conflict; Civil War;

     Revolutions; Insurgencies; Population Concentration; Democracy; Power

     Sharing; Inefficient Institutions

    JEL: D02 D74 O18 R12

URL: http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/gac8g25hn9gdbnog775lou0p2&r=soc

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