Economic Sociology
The Financial Premium in the US Labor Market: A Distributional Analysis
Ken-Hou Lin
Using both cross-sectional and panel data, this article revisits the evolution of the financial premium between 1970 and 2011 with a distributional approach. I report that above-market compensation was present in the finance sector in the 1970s, but concentrated mostly at the bottom of the earnings distribution. The financial premium observed since the 1980s, however, is largely driven by excessive compensation at the top, a development that increasingly contributes to the national concentration of earnings. Furthermore, the analysis suggests that the financial premium for top earners remained robust in the early 2000s, when deregulation slowed down, and in the aftermath of the recent financial meltdown. These findings are inconsistent with the account that the earnings differential is driven by unobserved skill difference and demand shocks but supportive of the institutional account of rising inequality.
Learning from Performance: Banks, Collateralized Debt Obligations, and the Credit Crisis
Kim Pernell-Gallagher
This article investigates how firms in competitive markets use external examples to assess the value of novel practices, focusing on the substantively important case of collateralized debt obligation (CDO) underwriting among US investment and commercial banks, 1996–2007. Diffusion researchers have struggled to adjudicate between competing mechanisms of social contagion, including imitation and learning. I use event-history methods to examine how banks responded to the activities and results of other CDO underwriters. I show that banks learned superstitiously from the share price performance of other CDO underwriters; as the popularity of CDO underwriting increased, banks became even more attentive to confirmatory evidence on this dimension. These findings suggest important refinements to theories of social contagion, especially neoinstitutional theory. By focusing on ordinary organizational processes in an extraordinary context, I uncover an alternative explanation for the rise of complex securitization, with implications for current understandings of the credit crisis.
Entrepreneurship
Status Beliefs and the Spirit of Capitalism: Accounting for Gender Biases in Entrepreneurship and Innovation
Sarah Thébaud
In this article, I develop and empirically test the theoretical argument that widely shared cultural beliefs about men’s and women’s abilities in entrepreneurship (i.e., “gender status beliefs”) systematically influence the social interactions during which an entrepreneur, particularly an innovative entrepreneur, seeks support from potential stakeholders for his or her new organization. To evaluate this argument, I conducted three experimental studies in the United Kingdom and the United States in which student participants were asked to evaluate the profiles of two entrepreneurs and to make investment decisions for each. The studies manipulated the gender of the entrepreneur and the innovativeness of the business plan. The main finding is consistent across studies: gender status beliefs disadvantage typical women entrepreneurs vis-à-vis their male counterparts, but innovation in a business model has a stronger and more positive impact on ratings of women’s entrepreneurial ability and overall support for their business ideas than it does for men’s. However, the strength of these patterns varies significantly depending on the societal and industry context of the new venture in question. Findings indicate that gender status beliefs can be understood as an important “demand-side” mechanism contributing to gender inequality in aggregate entrepreneurship rates and a micro-level factor affecting the likelihood that a new and novel organization will emerge and survive.
Social Belonging and Economic Action: Affection-Based Social Circles in the Creation of Private Entrepreneurship
Dali Ma
Most social network studies following Granovetter’s (1985) vision of embeddedness have either focused on instrumental relations or lumped instrumentality and sentimentality together. This study seeks to clarify whether social relations that primarily build on sentimentality can impact economic action. Based on the context of Chinese market transition, this paper found that general managers that had affection-based social circles, that is, small groups in which people enjoy being together, were more likely to start a private firm after being laid off. In contrast, business-based social circles, defined as small groups mainly formed on business interests, did not have a significant interactive effect with layoff. These findings are consistent with the argument that affection-based social circles help managers experiencing job loss maintain a stable and positive self-identity, and that these circles also exert less constraint over radical career change.
Education
Expectations on Track?: High School Tracking and Adolescent Educational Expectations
Kristian Bernt Karlson
This paper examines the role of adaptation in expectation formation processes by analyzing how educational tracking in high schools affects adolescents’ educational expectations. I argue that adolescents view track placement as a signal about their academic abilities and respond to it in terms of modifying their educational expectations. Applying a difference-in-differences approach to the National Educational Longitudinal Study of 1988, I find that being placed in an advanced or honors class in high school positively affects adolescents’ expectations, particularly if placement is consistent across subjects and if placement contradicts tracking experiences in middle school. My findings support the hypothesis that adolescents adapt their educational expectations to ability signals sent by schools.
How Has Educational Expansion Shaped Social Mobility Trends in the United States?
Fabian T. Pfeffer, Florian R. Hertel
This contribution provides a long-term assessment of intergenerational social mobility trends in the United States across the 20th and early 21st centuries and assesses the determinants of those trends. In particular, we study how educational expansion has contributed to the observed changes in mobility opportunities for men across cohorts. Drawing on recently developed decomposition methods, we empirically identify the contribution of each of the multiple channels through which changing rates of educational participation shape mobility trends. We find that a modest but gradual increase in social class mobility can nearly exclusively be ascribed to an interaction known as the compositional effect, according to which the direct influence of social class backgrounds on social class destinations is lower among the growing number of individuals attaining higher levels of education. This dominant role of the compositional effect is also due to the fact that, despite pronounced changes in the distribution of education, class inequality in education has remained stable while class returns to education have shown no consistent trend. Our analyses also provide a cautionary tale about mistaking increasing levels of social class mobility for a general trend toward more fluidity in the United States. The impact of parental education on son’s educational and class attainment has grown or remained stable, respectively. Here, the compositional effect pertaining to the direct association between parental education and son’s class attainment counteracts a long-term trend of increasing inequality in educational attainment tied to parents’ education.
Migration and Immigration
Beyond “White by Law”: Explaining the Gulf in Citizenship Acquisition between Mexican and European Immigrants, 1930
Cybelle Fox, Irene Bloemraad
Between 1790 and 1952, naturalization was reserved primarily for “free white persons.” Asian immigrants were deemed non-white and racially ineligible for citizenship by legislation and the courts. European immigrants and, importantly, Mexican immigrants were considered white by law and eligible for naturalization. Yet, few Mexicans acquired US citizenship. By 1930, only 9 percent of Mexican men had naturalized, compared to 60 percent of southern and eastern Europeans and 80 percent of northern and western Europeans. If Mexicans were legally white, why did they rarely acquire citizenship in the early decades of the 20th century? We go beyond analyses focused on formal law or individual-level determinants to underscore the importance of region and non-white social status in influencing naturalization. Using 1930 US Census microfile data, we find that while individual characteristics (e.g., length of residence and literacy) explain some of the gulf in citizenship, the context of reception mattered nearly as much. Even if Mexicans were “white by law,” they were often judged non-white in practice, which significantly decreased their likelihood of naturalizing. Moreover, the more welcoming political and social climate of the Northeast and Midwest, where most European migrants lived, facilitated their acquisition of American citizenship.
Hispanics at the Starting Line: Poverty among Newborn Infants in Established Gateways and New Destinations
Daniel T. Lichter, Scott R. Sanders, Kenneth M. Johnson
High rates of Hispanic fertility raise an important question: Do Hispanic newborn babies start life’s race behind the starting line, poor and disadvantaged? To address this question, we link the newborn infants identified with the new fertility question in the 2006–2010 American Community Survey (ACS) to the poverty status of mothers. Our results document the disproportionately large share (40 percent) of Hispanic babies who are born into poverty. The prospect of poverty is especially high in new Hispanic destinations, especially those in rural areas. For Hispanic newborn babies, poverty cannot be reduced to supply-side explanations that emphasize maladaptive behavioral decision-making of parents, that is, nonmarital or teen childbearing, low educational attainment, acquisition of English language skills, or other dimensions of human capital. Hispanics in new destinations often start well behind the starting line—in poverty and with limited opportunities for upward mobility and an inadequate welfare safety net. The recent concentration of Hispanic poverty in new immigrant destinations portends continuing intergenerational inequality as today’s newborn infants make their way to productive adult roles.
The Resurgence of Race in Spain: Perceptions of Discrimination Among Immigrants
René D. Flores
The contemporary relevance of the concept of “race” has been increasingly questioned around the world. In Europe, researchers often look with skepticism at the US emphasis on race, instead highlighting the capacity of culture, especially religion, to explain native opposition to immigrants. Using two distinct data sets, I examine self-reports of discrimination among immigrants in Spain, where elites have long denied racial differences, to understand how the reported salience of boundaries based on race, nationality, and religion change with acculturation. I find that reports of both nationality- and race-based discrimination are relatively common for newcomers, while reports of religion-based discrimination are quite rare. Yet, unlike reports of racial discrimination, reports of nationality discrimination decrease over time as immigrants’ cultural differences decline due to their cultural assimilation. For second-generation immigrants, especially non-Europeans, race replaces nationality as the primary explanation for discrimination experiences and reports of religious discrimination grow even more infrequent. I conclude that, from the perspective of immigrants, the recent transformation of Spain into a new immigrant destination has gone hand in hand with the emergence of race as the main symbolic boundary marginalizing non-European immigrants in Spain.
Negotiating Migration, Performing Gender
Anju Mary Paul
Increasing numbers of independent women labor migrants leave countries in the Global South every year to work overseas. However, our understanding of how exactly gender and migration intersect at the decision-making moment is still inadequate. The new economics of labor migration (NELM) argument that individual migration is a household-level decision has been criticized by feminist scholars for ignoring the gendered social norms and inequitable intra-household power distribution that can make it difficult for prospective independent female labor migrants to leave their homes to work overseas. To reconcile NELM with gender reality, I propose an explicitly gendered, “negotiated migration model” that separates the pre-migratory process into three parts: an individual-level aspiration, the household-/family-level negotiation, and only then, the migration decision. The intermediate negotiation phase is a dynamic, two-sided, discursive site where both the aspiring migrant and her relatives engage in gendering practices and gender performances to bolster their respective positions. Interviews with 139 Filipino migrant domestic workers reveal that successful female migrants win their families’ support by coopting gendered scripts prevalent in Philippine society. Rather than attempting to “undo” gender, these women reframe their migration aspirations as a duty, rather than a right, to migrate, and a logical extension of their traditional, supporting roles as daughters, wives, sisters, and/or mothers. Thus, even though these women migrants break gender barriers when it comes to their independent labor migration, they do so by “doing,” rather than “undoing,” gender.
Housing and Poverty
Eviction’s Fallout: Housing, Hardship, and Health
Matthew Desmond, Rachel Tolbert Kimbro
Millions of families across the United States are evicted each year. Yet, we know next to nothing about the impact eviction has on their lives. Focusing on low-income urban mothers, a population at high risk of eviction, this study is among the first to examine rigorously the consequences of involuntary displacement from housing. Applying two methods of propensity score analyses to data from a national survey, we find that eviction has negative effects on mothers in multiple domains. Compared to matched mothers who were not evicted, mothers who were evicted in the previous year experienced more material hardship, were more likely to suffer from depression, reported worse health for themselves and their children, and reported more parenting stress. Some evidence suggests that at least two years after their eviction, mothers still experienced significantly higher rates of material hardship and depression than peers.
Housing Policy and Urban Inequality: Did the Transformation of Assisted Housing Reduce Poverty Concentration?
Ann Owens
Poverty concentration reflects long-standing inequalities between neighborhoods in the United States. As the poverty concentration paradigm gained traction among policymakers and social scientists, assisted housing policy was overhauled. New assisted housing programs introduced since 1970 have dramatically reduced the geographic concentration of assisted housing units, changing the residential location of many low-income residents. Was this intervention in the housing market enough to reduce poverty concentration? Using national longitudinal data, I find that the deconcentration of assisted housing from 1977 to 2008 only modestly reduced poverty concentration in the 100 largest metropolitan areas. The results are driven by the deconcentration of assisted housing after 2000, when policies had a greater focus on dispersal of assisted housing to low-poverty neighborhoods. My results suggest that even a substantial shift in housing policy cannot make great strides in deconcentrating poverty given the existing landscape of durable urban inequality. Assisted housing policy exists alongside many other structural forces that cluster poor residents in neighborhoods, and these factors may limit its ability to reduce poverty concentration. Moreover, new housing programs rely on the private market to determine the location of assisted units, and the enduring place hierarchy among neighborhoods may influence both where assisted housing is located and its effect on the residential choices of non-assisted residents in ways that undermine poverty deconcentration.
Unions
What Do Unions Do?: A Cross-National Reexamination of the Relationship between Unionization and Job Satisfaction
Lena Hipp, Rebecca Kolins Givan
What is the relationship between unionization and job satisfaction? Despite a great deal of research over several decades, the answer to this question is still uncertain. In contrast to earlier work, which analyzed mostly data from individual companies or countries, we examine the association between union membership and job satisfaction in a cross-national perspective. We therefore combine large-scale survey data with country-level information about union and labor-market characteristics. Our multilevel approach allows us to examine whether and why the unionization–job satisfaction relationship varies across countries. The main finding of our analyses is that the relationship between union membership and job satisfaction varies across countries and that unions matter only for certain aspects of job satisfaction—those that can more readily be changed by unions. This effect, moreover, is contingent on countries’ industrial relations systems, in particular union density, bargaining coverage, and the centralization of bargaining agreements. Taken together, our results show that in order to understand how unionization influences job satisfaction, it is important to distinguish between the various aspects of job satisfaction and to consider the larger context in which unions operate.
Sexualities
Time Period, Generational, and Age Differences in Tolerance for Controversial Beliefs and Lifestyles in the United States, 1972–2012
Jean M. Twenge, Nathan T. Carter, W. Keith Campbell
Americans have become increasingly tolerant of controversial outgroups in results from the nationally representative General Social Survey (1972–2012, N = 35,048). Specifically, adults in the 2010s (versus the 1970s and 1980s) were more likely to agree that Communists, homosexuals, the anti-religious, militarists, and those believing Blacks are genetically inferior should be allowed to give a public speech, teach at a college, or have a book in a local library. Cross-classification hierarchical linear modeling (HLM) analyses separating the effects of time period, cohort/generation, and age show that these trends were driven by both a linear time period effect and a curvilinear cohort effect, with those born in the late 1940s (Boomers) the most tolerant when age and time period were controlled. Tolerance of homosexuals increased the most, and tolerance of racists the least. The increase in tolerance is positively correlated with higher levels of education and individualistic attitudes, including rejecting traditional social rules, but is negatively correlated with changes in empathy.
The Power of Love: The Role of Emotional Attributions and Standards in Heterosexuals' Attitudes toward Lesbian and Gay Couples
Long Doan, Lisa R. Miller, Annalise Loehr
Do people attribute emotions differently to members of various social groups? If so, do these differences have any bearing on formal and informal forms of social recognition? Using data from a nationally representative survey experiment, we examine whether American heterosexuals differentially attribute love to lesbian, gay, and heterosexual couples. We also examine the relationship between how in love lesbian, gay, and heterosexual couples are perceived to be and attitudes toward (1) granting them partnership benefits (formal rights); (2) the acceptability of their public displays of affection (informal privileges); and (3) marriage. Three main findings suggest that heterosexuals differentially attribute love to different types of romantic couples and that these differences are related to willingness to grant social recognition. First, gay couples are viewed as less loving than both heterosexual and lesbian couples; lesbian couples are seen as equally loving as heterosexual couples. Second, perceptions of love are related to willingness to grant social recognition. Third, perceptions of love matter more for gay and, to a lesser extent, lesbian couples than for heterosexual couples regarding informal privileges and marriage. In contrast, love matters equally for same-sex and heterosexual couples regarding formal rights. The results show that gay couples are penalized most in terms of perceptions of love and social recognition, whereas lesbians occupy a liminal space between heterosexual and gay couples. Collectively, these findings suggest that sexual identity and gender shape emotional attributions, which in turn play a key role in explaining inequalities that same-sex couples face.
Social Networks
“Network Intervention:.”: Assessing the Effects of Formal Mentoring on Workplace Networks
Sameer B. Srivastava
This article assesses the effects of formal mentoring on workplace networks. It also provides conceptual clarity and empirical evidence on expected gender differences in the effects of such programs. Qualitative interviews with 40 past participants in a formal mentoring program at a software laboratory in Beijing, China, provide insight into the core mechanisms by which such programs produce network change: access to organizational elites, participation in semiformal foci, enhanced social skills, and legitimacy-enhancing signals. These mechanisms are theorized to lead to an expansion in proteges' networks, relative to those of non-participants in formal mentoring. Legitimacy-enhancing signals are theorized to enable female proteges to derive greater network benefit from formal mentoring than their male counterparts. Empirical support for these propositions comes from a longitudinal quasi-experiment involving 75 employees who experienced the treatment of formal mentoring and 64 employees in a matched control group. A second empirical strategy, which exploits exogenous variation in the timing of treatment and enables a comparison of the post-program networks of one treated group to the pre-program networks of another treated group, provides corroborating support. These findings contribute to research on the efficacy of formal mentoring, gender and workplace networks, and the cumulative advantage or disadvantage that can arise from network change.
Partnership Ties Shape Friendship Networks: A Dynamic Social Network Study
Christoph Stadtfeld, Alex (Sandy) Pentland
Partnership ties shape friendship networks through different social forces. First, partnership ties drive clustering in friendship networks: individuals who are in a partnership tend to have common friends and befriend other couples. Second, partnership ties influence the level of homophily in these emerging friendship clusters. Partners tend to be similar in a number of attributes (homogamy). If one partner selects friends based on preferences for homophily, then the other partner may befriend the same person regardless of whether they also have homophilic preferences. Thus, two homophilic ties emerge based on a single partner's preferences. This amplification of homophily can be observed in many attributes (e.g., ethnicity, religion, age). Gender homophily, however, may be de-amplified, as the gender of partners differs in hetero-sexual partnerships. In our study, we follow dynamic friendship formation among 126 individuals and their cohabiting partners in a university-related graduate housing community over a period of nine months (N = 2,250 self-reported friendship relations). We find that partnership ties strongly shape the dynamic process of friendship formation. They are a main driver of local network clustering and explain a striking amount of homophily.
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