Immigrants, Trust, and Social Traps

Marini, Annalisa (2016): Immigrants, Trust, and Social Traps.

Abstract

The paper estimates a social interactions model to study the impact of culture on US immigrants' decisions. The paper contributes to the literature as follows. It first estimates a social interactions model of peer effects that models both group formation and the formation of social interactions. In addition, because it is an observational learning model, policy suggestions may be drawn to favor integration of immigrants. Finally, it provides a new empirical strategy to study the impact of both inherited and contemporaneous culture on individual decisions. Findings vary by group of immigrants and by type of social interactions, and they are robust to both additional checks and sensitivity analysis.

• Item Type: MPRA Paper
• Language: English
• Keywords: Social Interactions, Culture, Sequential Logit, Simulations
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C31 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions ; Social Interaction Models; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology

References

Alesina, A. and La Ferrara, E. (2002). "Who Trust Others?", Journal of Public Economics, vol. 85(2), 207-234.

Algan, Y. and Cahuc, P. (2010). "Inherited Trust and Growth", American Economic Review, vol. 100(5), 2060-2092.

Allison, P.D. (1999). "Comparing Logit and Probit Coefficients across Groups", Sociological Methods and Research, vol. 28(2), 186-208.

Amemiya, T. (1985). Advanced Econometrics, Harvard University Press.

Bénabou, R. (1993). "Working of a City: Location, Education and Production", The Quarterly Journal of Economics, vol. 108(3), 619-652.

Bénabou, R. (1996). "Equity and Efficiency in Human Capital Investment: the Local Connection", Review of Economic Studies, vol. 63(2), 237-264.

Bénabou, R. and Tirole, J. (2006). "Beliefs in a Just World and Redistributive Politics", The Quarterly Journal of Economics, vol. 121(2), 699-746.

Bisin, A. and Verdier, T. (2001). "The Economics of Cultural Transmission and the Evolution of Preferences", Journal of Economic Theory, 97, 298-319.

Blume, L., Brock, W., Durlauf, S.N., and Ioannides, Y.M. (2011). "Identification of Social Interactions", Handbook of Social Economics, Benhabib, J., Bisin, A. and Jackson, M.O. eds., vol. 1, Chapter 18, 853-964. Amsterdam, North-Holland.

Brock, W., and Durlauf, S.N. (2001a). "Interactions-Based Models", Handbook of Econometrics, Heckman, J.J. and Leamer E. eds., vol. 5, Chapter 54, 2209-2235, North-Holland.

Brock, W., and Durlauf, S.N. (2001b). "Discrete Choice with Social Interactions", Review of Economic Studies, 68(2), 235-260.

Brock, W., and Durlauf, S.N. (2002). "A Multinomial Choice Model of Neighborhood Effects", American Economic Review, vol. 92(2), 298-303.

Brock, W., and Durlauf, S.N. (2006). "Multinomial Choice with Social Interactions", The Economy as Evolving Complex System, Blume L. and Durlauf, S.N., Chapter 8, 175-206, Oxford University Press, Oxford.

Brock, W., and Durlauf, S.N. (2007). "Identification of binary choice models with social interactions", Journal of Econometrics, vol. 140(1), 52-75.

Buis, M.L. (2011). "The consequences of unobserved heterogeneity in a sequential logit model", Research in Social Stratification and Mobility, vol. 29(3), 247-262.

Buis, M.L. (2015). "Not all Transitions are Equal: The Relationship between Effects of Passing Steps in a Sequential Process and Effects on the Final Outcome", Sociological Methods and Research, 1-33.

Butler, J., Giuliano, P. and Guiso, L. (2016). "The Right Amount of Trust", Journal of the European Economic Association, 14(5), 1155-1180.

Cameron, S.V., and Heckman, J. (1998). "Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five Cohorts of American Males", Journal of Political Economy, vol. 106(2), 262-333.

Constant, A.F., and Zimmermann, K.F. (2008). "Measuring Ethnic Identity and Its Impact on Economic Behavior", Journal of the European Economic Association, vol. 6(2-3), 424-433.

Cutler, D.M., Glaeser, E.L. and Vigdor, J.L. (2008). "Is the Melting Pot Still Hot? Explaining the Resurgence of Immigrant Segregation", Review of Economics and Statistics, vol. 90, 478-497.

Damm, A.P. and Dustmann, C. (2014), "Does Growing Up in a High Crime Neighborhood Affect Youth Criminal Behavior?", American Economic Review, vol. 104(6), 1806-1832.

De Giorgi, G., Pellizzari, M. and Redaelli, S. (2010), "Identification of Social Interactions throughout Partially Overlapping Peer Groups", American Economic Journal: Applied Economics, vol. 2(2), 241-275.

Demaris, A. and Yang, R. (1994), "Race relations and interpersonal mistrust", Sociological Spectrum, vol. 94(14), 327-349.

Dienesen, P.T. (2012a). "Does generalized (Dis)trust travel? Examining the impact of cultural heritage and destination-country environment on trust of immigrants", Political Psychology, vol. 33(4), 495-511.

Dienesen, P.T. (2012b). "Parental transmission of trust or perceptions of institutional fairness: generalized trust of non-Western immigrants in a high-trust society", Comparative Politics, vol. 44(3), 273-289.

Dienesen, P.T. (2013). "Where you come from or where you live? Examining the cultural and institutional explanation of generalized trust using migration as a natural experiment", European Sociological Review, vol. 29(1), 114-128.

Dienesen, P.T., and Hooge, M. (2010). "When in Rome do as the Romans do: the acculturation of generalized trust among immigrants in Western Europe", International Migration Review, vol. 44(3), 697-727.

Durlauf, S.N. (1996). "A Theory of Persistence in Income Inequality", Journal of Economic Growth, vol. 1(1), 75-93.

Durlauf, S.N. (2002). "On the Empirics of Social Capital", Economic Journal, vol. 112(483), F459-F479.

Durlauf, S.N., and Fafchamps, M. (2005). "Social Capital", Handbook of Economic Growth, Durlauf S.N. and Aghion P. eds., Vol. 1, Chapter 26, 1639-1699, Amsterdam, North-Holland.

Falk, A. and Ichino, A. (2006). "Clean Evidence of Peer Effects", Journal of Labor Economics, vol. 24(1), 39-57.

Gallup (2015). "Frequent Church Attendance Highest in Utah Lowest in Vermont", http://www.gallup.com/poll/181601/frequent-church-attendance-highest-utah-lowest-vermont.aspx/, last accessed: 2016-11-24.

Graham, B.S. (2008). "Identifying Social Interactions through Conditional Variance Restrictions", Econometrica, vol. 76(3), 643-660.

Graham, B.S. (2009). "Endogenous neighborhood selection, the distribution of income, and the identification of neighborhood effects", Department of Economics, New York University.

Guiso, L., Sapienza, P. and Zingales, L. (2004). "The Role of Social Capital in Financial Development", American Economic Review, vol. 94(3), 526-556.

Guiso, L., Sapienza, P. and Zingales, L. (2012). "Civic Capital as the Missing Link", Handbook of Social Economics, Bisin A. and Benhabib, J. and Jackson, M. eds., vol. 1A, Chapter 26, 417-480. Amsterdam, North-Holland.

Harrison, L.E. (2008). The Central Liberal Truth: How Politics Can Change a Culture and Save it from Itself, Oxford University Press.

Heckman, J. (1979). "Sample Selection Bias as a Specification Error", Econometrica, vol. 47(1), 153-161.

Hoxby, C. (2000). "Peer Effects in the Calssrom: Learning from Gender and Race Variation", NBER working paper, w.p. no. 7867.

Kasy, M. (2015). "Identification in a model of sorting with social externalities", Journal of Urban Economics, vol. 85, 16-33.

King, G. and Wand, J. (2007). "Comparing Incomparable Survey Responses: Evaluating and Selecting Anchoring Vignettes", Political Analysis, vol. 15(1), 46-66.

Kirkeboen, L., Leuven, E., and Mogstad, M. (2016). "Fields of Study, Earnings and Self-Selection", The Quarterly Journal of Economics, vol. 131(3), 1057-1111.

Kumlin, S. and Rothstein, B. (2010). "Questioning the New Liberal Dilemma. Immigrants, Social Networks, and Institutional Fairness", Comparative Politics, vol. 43(1), 63-80.

Ljunge, M. (2014). "Trust Issues: evidence on the intergenerational trust transmission among children of immigrants", Journal of Economic Behaviour and Organization, vol. 106, 175-196.

Maddala, G. (1983). Limited Dependent and Qualitative Variables in Econometrics, Cambridge University Press.

Manski, C. (1993). "Identification of endogenous social effects: The reflection problem", The Review of Economic Studies, vol. 60(3), 531-542.

Manski, C. (2000). "Economic Analysis of Social Interactions", Journal of Economic Perspectives, vol. 14(3), 115-136.

Mare, R.D. (1980). "Social background and school continuation decisions". Journal of the American Statistical Association, vol. 75, 295-305.

Moffitt, R.A. (2001). "Policy Interventions, Low-level Equilibria, and Social Interactions", in Social Dynamics, 45-82.

Moschion, J. and Tabasso, D. (2014). "Trust of Second Generation Immigrants: Intergenerational Transmission or Cultural Assimilation?", IZA Journal of Migration, vol. 3, 1-30.

Nagakura, D., and Kobayashi, M. (2009). "Testing the Sequential Logit Model Against the Nested Logit Model", The Japanese Economic Review, vol. 60(3), 345-361.

Nunn, N., and Wantchekon, L. (2011). "The Slave Trade and the Origin of Mistrust in Africa", American Economic Review, vol. 101(7), 3221-3252.

Pinto, R. (2015). "Selection-bias in a Controlled Experiment: The Case of Moving to Opportunity", mimeo.

Platt, J. (1973). "What determines the trust of immigrants in criminal justice institutions in Europe?", American Psychologist, vol. 28, 641-651.

Putnam, R.D. (2007). "A Pluribus Unum: Diversity and Community in the Twenty-First Century", Scandinavian Political Studies, vol. 30(2), 137-174.

Putnam, R.D., Leonardi, R. and Nanetti, R.Y. (1993). Making Democracy Work: Civic Traditions in Modern Italy, Princeton, Princeton University Press.

Rastogi, S.T., Johnston, T.D., Hoeffel, E.M. and Drewery, M.P. (2011). "The Black Population: 2010. 2010 Census Brief.", US Government Census.

Röder, A. and Muhlau, P. (2011). "What determines the trust of immigrants in criminal justice institutions in Europe?", European Journal of Criminology, vol. 9(4), 370-387.

Rothstein, B. (2005), Social Traps and The Problem of Trust, Cambridge University Press.

Sacerdote, B. (2001), "Peer Effects with Random Assignment: results for Darmouth Roommates", The Quarterly Journal of Economics, 116(2), 681-704.

Spolaore, E., and Wacziarg, R. (2009). "The Diffusion of Development", The Quarterly Journal of Economics, vol. 124(2), 469-529.

Tabellini, G. (2008a). "The Scope of Cooperation: Values and Incentives", The Quarterly Journal of Economics, vol. 123(3), 905-950.

Tabellini, G. (2008b). "Institutions and Culture", Journal of the European Economic Association, vol. 6(2-3), 255-294.

Tabellini, G. (2010). "Culture and Institutions. Economic Development in the Regions of Europe", Journal of the European Economic Association, vol. 8(4), 677-716.

Topa, G. (2001). "Social Interactions, Local Spillovers, and Unemployment", The Review of Economic Studies, vol. 68(2), 261-295.

Train, K. (2003). Discrete Choice Methods with Simulations, Cambridge University Press.

Zanella, G. (2007). "Discrete Choice with Social Interactions and Endogenous Membership", Journal of the European Economic Association, vol. 5(1), 122-153.