A Model of Social Interactions and Endogenous Poverty Traps
This paper develops a model of social interactions and endogenous poverty traps. The key idea is captured in a framework in which the likelihood of future social interactions with members of one%u2019s group is partly determined by group-specific investments made by individuals. I prove three main results. First, some individuals expected to make group-specific capital investments are worse off because their observed decision is used as a litmus test of group loyalty %u2014 creating a tradeoff between human capital and cooperation among the group. Second, there exist equilibria which exhibit bi-polar human capital investment behavior by individuals of similar ability. Third, as social mobility increases this bi-polarization increases. The models predictions are consistent with the bifurcation of distinctively black names in the mid-1960s, the erosion of black neighborhoods in the 1970s, accusations of %u2018acting white,%u2019 and the efficacy of certain programs designed to encourage human capital acquisition.
|Date of creation:||Jul 2006|
|Date of revision:|
|Note:||ED LS PE|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Greif, Avner, 1994. "Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 912-50, October.
- Edward L. Glaeser & David Laibson & Bruce Sacerdote, 2002. "An Economic Approach to Social Capital," Economic Journal, Royal Economic Society, vol. 112(483), pages 437-458, November.
- David Austen-Smith & Ronald G. Fryer, 2005. "An Economic Analysis of 'Acting White'," Discussion Papers 1399, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Borjas, George J, 1995.
"Ethnicity, Neighborhoods, and Human-Capital Externalities,"
American Economic Review,
American Economic Association, vol. 85(3), pages 365-90, June.
- George J. Borjas, 1994. "Ethnicity, Neighborhoods, and Human Capital Externalities," NBER Working Papers 4912, National Bureau of Economic Research, Inc.
- 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 271-91, April.
- Eli Berman, 1998.
"Sect, Subsidy, and Sacrifice: An Economist's View of Ultra-Orthodox Jews,"
NBER Working Papers
6715, National Bureau of Economic Research, Inc.
- Eli Berman, 2000. "Sect, Subsidy, and Sacrifice: An Economist's View of Ultra-Orthodox Jews," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 905-953.
- Roland G. Fryer, Jr. & Paul Torelli, 2005. "An Empirical Analysis of 'Acting White'," NBER Working Papers 11334, National Bureau of Economic Research, Inc.
- Heckman, James J., 2000.
"Policies to foster human capital,"
Research in Economics,
Elsevier, vol. 54(1), pages 3-56, March.
- James Heckman, 2000. "Policies to Foster Human Capital," Working Papers 0028, Harris School of Public Policy Studies, University of Chicago.
- James J. Heckman, 1999. "Policies to Foster Human Capital," NBER Working Papers 7288, National Bureau of Economic Research, Inc.
- James J. Heckman, 2000. "Policies to Foster Human Capital," JCPR Working Papers 154, Northwestern University/University of Chicago Joint Center for Poverty Research.
- Edward P. Lazear, 1995.
"Culture and Language,"
NBER Working Papers
5249, National Bureau of Economic Research, Inc.
- David Austen-Smith & Roland G. Fryer, 2005. "An Economic Analysis of "Acting White"," The Quarterly Journal of Economics, Oxford University Press, vol. 120(2), pages 551-583.
- Samuel Bowles & Herbert Gintis, 2000.
"The Evolution of Strong Reciprocity,"
UMASS Amherst Economics Working Papers
2000-05, University of Massachusetts Amherst, Department of Economics.
- Roland G. Fryer & Steven D. Levitt, 2004. "The Causes and Consequences of Distinctively Black Names," The Quarterly Journal of Economics, Oxford University Press, vol. 119(3), pages 767-805.
- George J. Borjas, 1992. "Ethnic Capital and Intergenerational Mobility," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 123-150.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:12364. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.