SOSOSO

The research project aims at analysing the impact of social networks on two different, but related phenomena: social exclusion and social mobility. The key role played by networks in explaining mobility and exclusion patterns has been largely documented in social sciences, in particular in sociology, but it has been essentially neglected by economists. Our aim is to fill this gap, and the novelty of our approach comes from the use of new concepts and tools developed in the economics of networks. Social scientists have long tried to understand why individuals with advantaged backgrounds generally end up being economically and socially more successful. The economic literature on social mobility and exclusion has focused on the role played by traits inherited from parents (genes, cultural norms, etc.) but has largely ignored peer effects. Some exceptions have accounted for these effects, but they usually model them as some aggregate characteristic of the community in which individuals live. We believe that models of peer effects should rely on a more detailed description than aggregate characteristics, and that social networks, which contain information on relations between individuals, provide the appropriate framework. We will study three channels through which networks affect mobility and exclusion, both theoretically and empirically. Our empirical investigations will make use of unique datasets containing detailed information on social networks. Economists have studied very few datasets containing network information, so their exploitation will constitute, as such, a significant contribution to the literature. In a first set of contributions, we will analyse how individuals, in a given economic environment, can see their chances of success increase or decrease, depending on the network they are embedded in. In particular, we will focus on the way in which social networks can shape differently the level of effort (typically in education) that individuals choose, based on complex interdependences. Whether they come from heterogeneous externalities, from social psychological factors, or from the social planner’s action, these differences constitute powerful explanations of social exclusion and of disparities in social mobility. We will also study these ideas empirically, using data from the National Longitudinal Survey of Adolescent Health, a survey of 132 middle and high schools in the United States. In a second set of contributions, we will analyse how networks affect the individuals’ economic environment, by protecting them differently against harmful events. In developing countries, coverage against shocks is often implemented through informal insurance, which is known to take place within social networks. We will analyze important issues that the literature has left aside: the relationship between the nature of the risk and the way individuals manage these risks; the impact of formal insurance on the informal arrangements which take place along network lines; the introduction of subsistence considerations. We will test our theory’s predictions on two datasets containing network information: One on 75 villages in South India, the other collected in 48 communities in Lesotho. Our third objective is to analyze how social networks provide different access to opportunities, and the impact this has on mobility and exclusion. We will investigate how networks facilitate the transmission of human capital or the access to the labor market. We will also introduce the views, accepted in other social sciences, that individuals interact in several networks, and study what this implies in terms of mobility and exclusion. Last, we will empirically examine how social structures affect the ability of a community to provide public goods, using original data collected in 121 villages in rural Mali. This should bring insights on the best way to introduce public policies in a community, as a function of its social structure.