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The network structure of mutual support links: Evidence from rural Tanzania

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  • Margherita Comola

    (PSE - Paris School of Economics, PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper takes a network perspective t oinvestigate how rural households in developing countries form the links through which they provide and get economic support. I test the hypothesis that indirect contacts (e.g. friends of friends) matter for link formation. An estimation procedure of a network formation model à la Jackson and Wolinsky (1996) is proposed and applied to data on a single village in Tanzania. Results show that when agents evaluate the net advantage of forming a link they also consider the wealth and the position of indirect contacts. The network externalities from indirect contacts are negative, which suggests a mechanism of competition over scarce resources. This paper proposes the first structural estimation of an endogenous network formation model, and also contributes to the development literature by overcoming the dyadic regression approach and providing evidence that village-level network structure has an explanatory value disregarded by all previous studies.

Suggested Citation

  • Margherita Comola, 2010. "The network structure of mutual support links: Evidence from rural Tanzania," PSE Working Papers halshs-00585968, HAL.
  • Handle: RePEc:hal:psewpa:halshs-00585968
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00585968
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    1. Antoni Calvó-Armengol & Eleonora Patacchini & Yves Zenou, 2009. "Peer Effects and Social Networks in Education," Review of Economic Studies, Oxford University Press, vol. 76(4), pages 1239-1267.
    2. De Weerdt, Joachim, 2002. "Risk-Sharing and Endogenous Network Formation," WIDER Working Paper Series 057, World Institute for Development Economic Research (UNU-WIDER).
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    Cited by:

    1. A. Stefano Caria & Marcel Fafchamps, 2015. "Can Farmers Create Efficient Information Networks? Experimental Evidence from Rural India," CSAE Working Paper Series 2015-07, Centre for the Study of African Economies, University of Oxford.

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    Keywords

    structural estimation; indirect contacts; mutual support; network formation;

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