IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/2222.html
   My bibliography  Save this paper

Labor market integration in the presence of social capital

Author

Listed:
  • Schiff, Maurice

Abstract

Labor market integration is typically assumed to improve welfare in the absence of distortions, because it allows labor to move to where returns are highest. The author examines this result in a simple general equilibrium model in the presence of a common property resource: social capital. Drawing on evidence that social capital raises productivity and falls with labor mobility, the author's main findings are that: 1) Labor market integration imposes a negative externality and need not raise welfare. 2) The welfare impact is more beneficial (or less harmful) the greater the difference in endowments is between the integrating regions. 3) Whether positive or negative, the welfare impact is larger the more similar the levels of social capital of the integrating regions are and the lower the migration costs are. 4) Trade liberalization generates an additional benefit -- over and above the standard gains from trade -- by reducing labor mobility and the negative externality associated with it. Trade liberalization is superior to labor market integration. 5) The creation of new private or public institutions in response to labor market integration may reduce welfare. The author shows that the welfare implications depend on two parameters of the model, the curvature of the utility function and the cost of private migration.

Suggested Citation

  • Schiff, Maurice, 1999. "Labor market integration in the presence of social capital," Policy Research Working Paper Series 2222, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2222
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1999/12/03/000094946_99112405321121/Rendered/PDF/multi_page.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-1093, Nov.-Dec..
    2. Rosenbloom, Joshua L., 1990. "Labor Market Institutions and the Geographic Integration of Labor Markets in the Late Nineteenth-Century United States," The Journal of Economic History, Cambridge University Press, vol. 50(2), pages 440-441, June.
    3. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1251-1288.
    4. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, December.
    5. Ramón López & Maurice Schiff, 1998. "Migration and the Skill composition of the Labor Force: The Impact of Trade Liberalization in LDCs," Canadian Journal of Economics, Canadian Economics Association, vol. 31(2), pages 318-336, May.
    6. Lederman, Daniel & Loayza, Norman & Menendez, Ana Maria, 2002. "Violent Crime: Does Social Capital Matter?," Economic Development and Cultural Change, University of Chicago Press, vol. 50(3), pages 509-539, April.
    7. Narayan, Deepa & Pritchett, Lant, 1999. "Cents and Sociability: Household Income and Social Capital in Rural Tanzania," Economic Development and Cultural Change, University of Chicago Press, vol. 47(4), pages 871-897, July.
    8. James R. MARKUSEN, 2021. "Factor Movements And Commodity Trade As Complements," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 15, pages 325-340, World Scientific Publishing Co. Pte. Ltd..
    9. John T. Durkin Jr., 1998. "Immigration, assimilation and growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 11(2), pages 273-291.
    10. Maurice Schiff, 1992. "Social Capital, Labor Mobility, and Welfare," Rationality and Society, , vol. 4(2), pages 157-175, April.
    11. Iannaccone, Laurence R, 1992. "Sacrifice and Stigma: Reducing Free-Riding in Cults, Communes, and Other Collectives," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 271-291, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jean-Marie Grether & Jaime de Melo & Tobias Müller, 2015. "The Political Economy of International Migration in a Ricardo–Viner Model," World Scientific Book Chapters, in: Developing Countries in the World Economy, chapter 17, pages 411-437, World Scientific Publishing Co. Pte. Ltd..
    2. Angel de la Fuente & Antonio Ciccone, 2003. "Human capital in a global and knowledge-based economy," UFAE and IAE Working Papers 562.03, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    3. Daniel Lederman, 2005. "Income Wealth, and Socialization in Argentina," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 42(125), pages 3-30.
    4. Thierry BAUDASSE, 2006. "Governance and Migration in a South-North Partnership : the Teaching of Economic Analysis," LEO Working Papers / DR LEO 691, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    5. Antoci, Angelo & Sacco, Pier Luigi & Vanin, Paolo, 2008. "Participation, growth and social poverty: social capital in a homogeneous society," MPRA Paper 13661, University Library of Munich, Germany.
    6. Maurice Schiff, 2004. "Labor Mobility, Trade, and Social Capital," Review of International Economics, Wiley Blackwell, vol. 12(4), pages 630-642, September.
    7. Antoci, Angelo & Sacco, Pier Luigi & Vanin, Paolo, 2001. "Economic Growth and Social Poverty: The Evolution of Social Participation," Bonn Econ Discussion Papers 13/2001, University of Bonn, Bonn Graduate School of Economics (BGSE).
    8. Lederman, Daniel, 2002. "Income, wealth, and socialization in Argentina : provocative responses from individuals," Policy Research Working Paper Series 2821, The World Bank.
    9. Leonardo Becchetti & Melania Michetti, 2008. "When Consumption Generates Social Capital: Creating Room for Manoeuvre for Pro-Poor Policies," Working Papers 88, ECINEQ, Society for the Study of Economic Inequality.
    10. de Melo, Jaime & Müller, Tobias & Miguet, Florence, 2002. "The Political Economy of EU Enlargement: Lessons from Switzerland," CEPR Discussion Papers 3449, C.E.P.R. Discussion Papers.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maurice Schiff, 2004. "Labor Mobility, Trade, and Social Capital," Review of International Economics, Wiley Blackwell, vol. 12(4), pages 630-642, September.
    2. Aghajanian, Alia Jane, 2016. "Social capital and conflict: impact and implications," Economics PhD Theses 0116, Department of Economics, University of Sussex Business School.
    3. Lederman, Daniel, 2002. "Income, wealth, and socialization in Argentina : provocative responses from individuals," Policy Research Working Paper Series 2821, The World Bank.
    4. Daniel Lederman, 2005. "Income Wealth, and Socialization in Argentina," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 42(125), pages 3-30.
    5. Arturo Galindo & Alberto Chong & César Calderón, 2001. "Structure and Development of Financial Institutions and Links with Trust: Cross-Country Evidence," Research Department Publications 4251, Inter-American Development Bank, Research Department.
    6. Schiff, Maurice, 2002. "Love thy neighbor: trade, migration, and social capital," European Journal of Political Economy, Elsevier, vol. 18(1), pages 87-107, March.
    7. Sabatini, Fabio, 2006. "The Empirics of Social Capital and Economic Development: A Critical Perspective," Knowledge, Technology, Human Capital Working Papers 12097, Fondazione Eni Enrico Mattei (FEEM).
    8. Robison, Lindon J. & Siles, Marcelo E. & Schmid, A. Allan, 2002. "Social Capital And Poverty Reduction: Toward A Mature Paradigm," Agricultural Economic Report Series 10941, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    9. Julie L. Hotchkiss & Anil Rupasingha & Thor Watson, 2022. "In-migration and Dilution of Community Social Capital," International Regional Science Review, , vol. 45(1), pages 36-57, January.
    10. Rupasingha, Anil & Goetz, Stephan J. & Freshwater, David, 2006. "The production of social capital in US counties," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(1), pages 83-101, February.
    11. Gonzalo Vargas Forero, 2002. "Hacia una teoría del capital social," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 4(6), pages 71-108, January-J.
    12. Marco Ferroni & Mercedes Mateo Díaz & J. Mark Payne, 2007. "Development under Conditions of Inequality and Distrust: An Exploration of the Role of Social Capital and Social Cohesion in Latin America," IDB Publications (Working Papers) 53818, Inter-American Development Bank.
    13. Jonathan Isham, 2002. "Social Capital and Consumption among Agricultural Households," Middlebury College Working Paper Series 0202, Middlebury College, Department of Economics.
    14. Fabio, Sabatini, 2005. "The empirics of social capital and economic development: a critical perspective," MPRA Paper 2366, University Library of Munich, Germany, revised Mar 2007.
    15. Arturo Galindo & Alberto Chong & César Calderón, 2001. "Estructura y desarrollo de instituciones financieras y su relación con la confianza: elementos de juicio de varios países," Research Department Publications 4252, Inter-American Development Bank, Research Department.
    16. Sabatini Fabio, 2007. "The empirics of social capital and economic development: A critical perspective," wp.comunite 0031, Department of Communication, University of Teramo.
    17. Fabio Sabatini, 2005. "The empirics of social capital and economic development. A critical perspective," Development and Comp Systems 0512015, University Library of Munich, Germany.
    18. Fabio Sabatini, 2005. "The empirics of social capital and economic development: a critical perspective," Development and Comp Systems 0512008, University Library of Munich, Germany.
    19. Jan Fałkowski & Maciej Jakubowski & Paweł Strawiński, 2014. "Returns from income strategies in rural Poland," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 22(1), pages 139-178, January.
    20. Kym Anderson, 2005. "On the Virtues of Multilateral Trade Negotiations," The Economic Record, The Economic Society of Australia, vol. 81(255), pages 414-438, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:2222. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.