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. Faith and Assimilation: Italian Immigrants in the US Gagliarducci, Stefano; Tabellini, Marco

2. Inequality is rising where social network segregation interacts with urban topology Gergõ Tóth; Johannes Wachs; Riccardo Di Clemente; Ákos Jakobi; Bence Ságvári; János Kertész; Balázs Lengyel

3. Social Exclusion and Ethnic Segregation in Schools: The Role of Teacher's Ethnic Prejudice Alan, Sule; Duysak, Enes; Kubilay, Elif; Mumcu, Ipek

4. Local Global Watchdogs: Trade, Sourcing and the Internationalization of Social Activism Koenig, Pamina; Krautheim, Sebastian; Löhnert, Claudius; Verdier, Thierry

5. Are Political and Charitable Giving Substitutes? Evidence from the United States Perez-Truglia, Ricardo; Petrova, Maria; Simonov, Andrei; Yildirim, Pinar

6. Sooner Rather Than Later: Social Networks and Technology Adoption Chowdhury, Shyamal; Satish, Varun; Sulaiman, Munshi; Sun, Yi

7. Changing Ingroup Boundaries: The Effect of Immigration on Race Relations in the US Fouka, Vasiliki; Tabellini, Marco

8. Attitudes Towards Migrants during Crisis Times Chatruc, Marisol Rodríguez; Rozo, Sandra V.

9. Social capital and economic growth in the regions of Europe Fitjar, Rune Dahl; Muringani, Jonathan; Rodríguez-Pose, Andrés

10. Are we strategically naïve or guided by trust and trustworthiness in cheap-talk communication? Li, Xiaolin; Özer, Özalp; Subramanian, Upender

11. Culture, Institutions & the Long Divergence Bisin, Alberto; Rubin, Jared; Seror, Avner; Verdier, Thierry

12. Social Position and Fairness Views Hvidberg, Kristoffer Balle; Kreiner, Claus T.; Stantcheva, Stefanie

13. Why Are Rational Expectations Violated in Social Interactions? Mohsen Foroughifar

1. Faith and Assimilation: Italian Immigrants in the US Gagliarducci, Stefano; Tabellini, Marco

We study the effects of religious organizations on immigrants' assimilation. We focus on the arrival of Italian Catholic churches in the US between 1900 and 1920, when four million Italians had moved to America, and anti-Catholic sentiments were widespread. We combine newly collected Catholic directories on the presence of Italian churches across years and counties with the full count US Census of Population. We find that Italian churches reduced the social assimilation of Italian immigrants, lowering intermarriage rates and increasing ethnic residential segregation. We find no evidence that this was the result of either lower effort exerted by immigrants to ``fit in'' the American society or increased desire to vertically transmit national culture. Instead, we provide evidence for other two, non-mutually exclusive, mechanisms. First, Italian churches raised the frequency of interactions among fellow Italians, likely generating peer effects and reducing contact with other groups. Second, they increased the salience of the immigrant community among natives, thereby triggering backlash and discrimination. JEL: J15 N31 Z12 Keywords: Assimilation; Immigration; religious organizations Date: 2021–02 URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:15794&r=&r=soc

2. Inequality is rising where social network segregation interacts with urban topology Gergõ Tóth (Agglomeration and Social Networks Lendület Research Group, Centre for Economic-and Regional Studies, Budapest, Hungaryand Spatial Dynamics Lab, University College Dublin, Dublin, Ireland); Johannes Wachs (Institute for Data, Process and Knowledge Management, Vienna University of Economics and Business, Vienna, Austria and Complexity Science Hub Vienna, Vienna, Austria); Riccardo Di Clemente (Department of Computer Science, University of Exeter, Exeter, UK and Centre for Advanced Spatial Analysis, University College London, London, UK); Ákos Jakobi (Department of Regional Science, Eötvös Loránd University, Budapest, Hungary and Institute of Advanced Studies, Kõszeg, Hungary); Bence Ságvári (CSS-Recens, Centre for Social Sciences, Budapest, Hungary and International Business School Budapest, Budapest, Hungary); János Kertész (Department of Network and Data Science, Central European University, Budapest, Hungary); Balázs Lengyel (Agglomeration and Social Networks Lendület Research Group, Centre for Economic-and Regional Studies, Budapest, Hungary; International Business School Budapest, Budapest, Hungary and NETI Lab, Corvinus Institute for Advanced Studies, Budapest Corvinus University, Budapest, Hungary)

Social networks amplify inequalities by fundamental mechanisms of social tie formation such as homophily and triadic closure. These forces sharpen social segregation, which is reflected in fragmented social network structure. Geographical impediments such as distance and physical or administrative boundaries also reinforce social segregation. Yet, less is known about the joint relationships between social network structure, urban geography, and inequality. In this paper we analyze an online social network and find that the fragmentation of social networks is significantly higher in towns in which residential neighborhoods are divided by physical barriers such as rivers and railroads. Towns in which neighborhoods are relatively distant from the center of town and amenities are spatially concentrated are also more socially segregated. Using a two-stage model, we show that these urban geography features have significant relationships with income inequality via social network fragmentation. In other words, the geographic features of a place can compound economic inequalities via social networks. JEL: C36 D85 I32 N34 R23 Z13 Keywords: social networks, income inequality, social segregation, network fragmentation, geographicalcal boundaries, urban topology Date: 2021–03 URL: http://d.repec.org/n?u=RePEc:has:discpr:2116&r=&r=soc

3. Social Exclusion and Ethnic Segregation in Schools: The Role of Teacher's Ethnic Prejudice Alan, Sule; Duysak, Enes; Kubilay, Elif; Mumcu, Ipek

Using detailed data on primary school children and their teachers, we show that teachers who hold prejudicial attitudes towards an ethnic group create socially and spatially segregated classrooms. We identify this relationship by leveraging a natural experiment where newly arrived refugee children are randomly assigned to teachers within schools. We elicit children's social networks to construct multiple measures of social exclusion and ethnic segregation in classrooms. We find that teachers' ethnic prejudice significantly lowers the prevalence of inter-ethnic social links, increases homophilic ties among host children, and puts refugee children at a higher risk of peer violence. Biased teachers' exclusionary classroom practices emerge as a likely mechanism that explains our results. We find that biased teachers tend to spatially segregate refugees, seat them at the back corners of classrooms, away from attention. Our results highlight the role of teachers in achieving integrated schools in a world of increasing ethnic diversity. JEL: I24 J15 Keywords: ethnic prejudice; ethnic segregation; social exclusion; Teacher effects Date: 2021–02 URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:15784&r=&r=soc

4. Local Global Watchdogs: Trade, Sourcing and the Internationalization of Social Activism Koenig, Pamina; Krautheim, Sebastian; Löhnert, Claudius; Verdier, Thierry

International NGO campaigns against the value chains of leading firms in a diverse set of industries are a salient feature of economic globalization. What determines the patterns of the internationalization of NGO campaigns? Stylized facts obtained from recently available data containing 102532 campaigns by 4343 NGOs targeting 11429 firms from 145 countries guide our theoretical analysis. We propose a model of global sourcing and international trade in which heterogeneous NGOs campaign against heterogeneous firms in response to infringements along their international value chains. We find that campaigns are determined by a triadic gravity equation, i.e. bilateral trade costs between the country of the NGO, the country of the firm and the sourcing country affect campaigns. Most notably, the latter implies that by advancing the internationalization of production, falling trade costs boost the internationalization of NGO campaigns. We use our data to estimate the NGO level triadic gravity equation implied by our model and find strong support for our predictions. JEL: F12 F14 F60 L31 O35 Keywords: campaigns; Gravity; international sourcing; international trade; NGOs; Social activism Date: 2021–03 URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:15878&r=&r=soc

5. Are Political and Charitable Giving Substitutes? Evidence from the United States Perez-Truglia, Ricardo; Petrova, Maria; Simonov, Andrei; Yildirim, Pinar

We provide evidence that individuals substitute between political contributions and charitable contributions, using micro data from the American Red Cross and Federal Election Commission. First, in a lab experiment, we show that information on the importance of charitable giving increases donations to charities and reduces donations to politics, while information on the importance of political campaigns has the opposite effect. We also show that similar results hold in observational data. We find that foreign natural disasters, which are positive shocks to charitable giving, crowd out political giving. We also find that political advertisement campaigns, which are positive shocks to political giving, crowd out charitable giving. Our evidence suggests that some individuals give to political and charitable causes to satisfy similar needs. Date: 2021–03 URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:15907&r=&r=soc

6. Sooner Rather Than Later: Social Networks and Technology Adoption Chowdhury, Shyamal (University of Sydney); Satish, Varun (University of Chicago); Sulaiman, Munshi (BRAC Institute of Governance and Development); Sun, Yi (University of Sydney)

Using data from a randomised experiment in Kenya, we estimate the causal effect of social networks on technology adoption. In this experiment, farmers were invited to information sessions about the use of Tissue Culture Banana (TCB), an in vitro banana cultivation technology. We find that an additional social connection with a treated farmer causes an untreated farmer to be 2.25 pp more likely to adopt TCB 6-18 months post-intervention, but not in the longer term. We provide evidence that the adoption of TCB by those social connections is the mechanism driving the effect; therefore, treated connections are significant because treated farmers are more likely to adopt. We also find that indirect social network effects, proxied for by eigenvector centrality, influence adoption at both the village level and the farmer level. JEL: O12 P36 Z13 Keywords: networks, social connections, agricultural technology adoption, Kenya Date: 2021–04 URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp14307&r=&r=soc

7. Changing Ingroup Boundaries: The Effect of Immigration on Race Relations in the US Fouka, Vasiliki (Stanford University); Tabellini, Marco (Harvard Business School)

How do social group boundaries evolve? Does the appearance of a new outgroup change the ingroup's perceptions of other outgroups? We introduce a conceptual framework of context-dependent categorization, in which exposure to one minority leads to recategorization of other minorities as in- or outgroups depending on perceived distances across groups. We test this framework by studying how Mexican immigration to the US affected White Americans' attitudes and behaviors towards Black Americans. We combine survey and crime data with a difference-in-differences design and an instrumental variables strategy. Consistent with the theory, Mexican immigration improves Whites' racial attitudes, increases support for pro-Black government policies and lowers anti-Black hate crimes, while simultaneously increasing prejudice against Hispanics. Results generalize beyond Hispanics and Blacks and a survey experiment provides direct evidence for recategorization. Our findings imply that changes in the size of one group can affect the entire web of inter-group relations in diverse societies. JEL: J11 J15 Keywords: ingroup–outgroup relations, race, immigration Date: 2021–04 URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp14311&r=&r=soc

8. Attitudes Towards Migrants during Crisis Times Chatruc, Marisol Rodríguez (Inter-American Development Bank); Rozo, Sandra V. (USC Marshall School of Business)

How are natives' attitudes towards migrants shaped by economic crises? Natives could show more empathy towards migrants as everyone faces a common threat. Alternatively, natives' prejudice could rise as competition for scarce economic opportunities increases. We conduct an online survey to 3,400 Colombian citizens and randomly prime half of them to think about the economic consequences of COVID-19, before eliciting their altruism and attitudes towards Venezuelan forced migrants. We find that natives' attitudes towards migrants are substantially more negative in the treatment relative to the control group. Individuals ages 18 to 25 years, however, respond by showing more altruism. JEL: D72 F2 O15 R23 Keywords: migration, COVID-19, attitudes, priming, altruism Date: 2021–04 URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp14319&r=&r=soc

9. Social capital and economic growth in the regions of Europe Fitjar, Rune Dahl; Muringani, Jonathan; Rodríguez-Pose, Andrés

Social capital is an important factor explaining differences in economic growth among regions. However, the key distinction between bonding social capital, which can lead to lock-in and myopia, and bridging social capital, which promotes knowledge flows across diverse groups, has been overlooked in growth research. In this paper, we address this shortcoming by examining how bonding and bridging social capital affect regional economic growth, using data for 190 regions in 21 EU countries, covering eight waves of the European Social Survey between 2002 and 2016. The findings confirm that bridging social capital is linked to higher levels of regional economic growth. Bonding social capital is highly correlated with bridging social capital and associated with lower growth when this is controlled for. We do not find significantly different effects of bonding social capital in regions with more or less bridging social capital, or vice versa. We examine the interaction between social and human capital, finding that bridging social capital is fundamental for stimulating economic growth, especially in low-skilled regions. Human capital also moderates the relationship between bonding social capital and growth, reducing the negative externalities imposed by excessive bonding. JEL: O17 O43 R11 Keywords: bonding; bridging; economic growth; EU; regions; social capital Date: 2021–03 URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:15871&r=&r=soc

10. Are we strategically naïve or guided by trust and trustworthiness in cheap-talk communication? Li, Xiaolin; Özer, Özalp; Subramanian, Upender

Cheap-talk communication between parties with conflicting interests is common in many business and economic settings. Two distinct behavioral economics theories, the trust-embedded model and the level-k model, have emerged to explain how cheap talk works between human decision makers. The trust-embedded model considers that decision makers are motivated by nonpecuniary motives to be trusting and trustworthy. In contrast, the level-k model considers that decision makers are purely self-interested but limited in their ability to think strategically. Although both theories have been successful in explaining cheap-talk behaviors in separate contexts, they point to contrasting drivers for human behaviors. In this paper, we provide the first direct comparison of both theories within the same context. We show that, in a cheap-talk setting that well represents many practical situations, the two models make characteristically distinct and empirically distinguishable predictions. We leverage past experiment data from this setting to determine what aspects of cheap-talk behavior each model captures well and which model (or combination of models) has better explanatory power and predictive performance. We find that the trust-embedded model emerges as the dominant explanation. Our results, thus, highlight the importance of investing in systems and processes to foster trusting and trustworthy relationships in order to facilitate more effective cheap-talk interactions. JEL: J50 Keywords: behavioral economics; bounded rationality; cheap talk; level-k thinking; trust; trustworthiness Date: 2021–03–22 URL: http://d.repec.org/n?u=RePEc:ehl:lserod:107103&r=&r=soc

11. Culture, Institutions & the Long Divergence Bisin, Alberto; Rubin, Jared; Seror, Avner; Verdier, Thierry

Recent theories of the Long Divergence between Middle Eastern and Western European economies focus on Middle Eastern (over-)reliance on religious legitimacy, use of slave soldiers, and persistence of restrictive proscriptions of religious (Islamic) law. These theories take as exogenous the cultural values that complement the prevailing institutions. As a result, they miss the role of cultural values in either supporting the persistence of or inducing change in the economic and institutional environment. In this paper, we address these issues by modeling the joint evolution of institutions and culture. In doing so, we place the various hypotheses of economic divergence into one, unifying framework. We highlight the role that cultural transmission plays in reinforcing institutional evolution toward either theocratic or secular states. We extend the model to shed light on political decentralization and technological change in the two regions. JEL: N34 N35 O10 O33 P16 P48 Z12 Keywords: cultural transmission; institutions; Legitimacy; Long Divergence; religion Date: 2021–02 URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:15802&r=&r=soc

12. Social Position and Fairness Views Hvidberg, Kristoffer Balle; Kreiner, Claus T.; Stantcheva, Stefanie

We link survey data containing Danish people's perceptions of where they rank in various reference groups and fairness views with administrative records on their income history, life events, and reference groups. People know their income positions well, but believe others are closer to themselves than they really are. The perceived fairness of inequalities is strongly related to current social position, moves with shocks to social position (e.g., unemployment or promotions), and changes when people are experimentally shown their actual positions. People view inequalities within education group and co-workers as most unfair, but underestimate inequality the most exactly within these reference groups. JEL: C81 D31 Keywords: fairness views; inequality; information experiment; misperceptions; Social Class Date: 2021–03 URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:15877&r=&r=soc

13. Why Are Rational Expectations Violated in Social Interactions? Mohsen Foroughifar

Individuals often interact with each other through observation -- they observe the choices of other people who possess private information. In such social interactions, it is typically assumed that decision makers have rational expectations, therefore they can infer what other decision makers know via observation of their choices. In this study, I assess the validity of the rational expectations assumption in a social interaction experiment. I use a simple and transparent experimental setting to show that decision makers often fail to exhibit rational expectations in social interactions and this behavior is independent of commonly documented errors in statistical reasoning: subjects exhibit a higher level of irrationality in the presence than in the absence of social interaction, even when they receive informationally equivalent signals across the two conditions. A series of treatments aimed at identifying mechanisms suggests that the behavior of other people are often "ambiguous" to a decision maker who observes their choices. So, the decision maker behaves as if she has limited ability to infer the relationship between what other people choose and what they know. Date: 2021–05 URL: http://d.repec.org/n?u=RePEc:arx:papers:2105.01043&r=&r=soc

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