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Peer correlations in income: Evidence from a Guanxi network in rural China

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Listed:
  • Fang, Hang
  • Chen, Qianheng
  • Delgado, Michael S.
  • He, Qinying

Abstract

We investigate peer correlations in income using a novel panel of data from a village in China. We construct a complete and heterogeneous social connections (guanxi) network that includes all households, and use spatial-network econometric models to estimate peer correlations. The results provide unique empirical evidence for the existence of a peer correlation in income, even after netting out influences of family characteristics, contextual effects, and various unobservable factors. We identify peer effects in land and labor allocations as the drivers of peer correlations in income.

Suggested Citation

  • Fang, Hang & Chen, Qianheng & Delgado, Michael S. & He, Qinying, 2023. "Peer correlations in income: Evidence from a Guanxi network in rural China," Economics Letters, Elsevier, vol. 222(C).
    • Handle: RePEc:eee:ecolet:v:222:y:2023:i:c:s0165176522004335
    DOI: 10.1016/j.econlet.2022.110959
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    References listed on IDEAS

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    4. Lars Lefgren & Matthew J. Lindquist & David Sims, 2012. "Rich Dad, Smart Dad: Decomposing the Intergenerational Transmission of Income," Journal of Political Economy, University of Chicago Press, vol. 120(2), pages 268-303.
    5. Zhai, Shengying & Chen, Qihui & Zhao, Qiran, 2022. "Beauty and popularity in friendship networks—Evidence from migrant schools in China," Economics Letters, Elsevier, vol. 215(C).
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    7. Mano, Yukichi & Yamano, Takashi & Suzuki, Aya & Matsumoto, Tomoya, 2011. "Local and Personal Networks in Employment and the Development of Labor Markets: Evidence from the Cut Flower Industry in Ethiopia," World Development, Elsevier, vol. 39(10), pages 1760-1770.
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    Cited by:

    1. Hang Fang & Ting Yu & Michael S Delgado & Qianheng Qian, 2024. "Infectious happiness in heterogeneous social networks: evidence from rural China," Economics Bulletin, AccessEcon, vol. 44(3), pages 1188-1195.
    2. Mingyong Hong & Jiao Long & Wenjun Zhuo, 2023. "Clan Networks, Spatial Selection, and Farmland Transfer Contracts: Evidence from China," Land, MDPI, vol. 12(8), pages 1-17, July.

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    More about this item

    Keywords

    Peer correlations; Income; Guanxi network; China;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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