Gergely Horvath
Accepted by Journal of Economic Behavior and Organization, August 2014
http://www.sciencedirect.com/science/article/pii/S0167268114002212

In this paper the author builds a labor market model with heterogeneous workers (differed by skill/sector type) and investigates the influence of social networks on job matching outcome. It turns out that compared with a formal market an economy with social networks has lower bad match level and higher matching efficiency when the skill homophily of the networks is sufficiently high. Moreover, the impact depends on the degree of homophily.

The reason here is unambiguous: employed workers usually hear about job information within the sector of their current job and transmit it to those with similar skills, which would reduce mismatch frequency.

Bramoullé, Yann, Rachel Kranton, and Martin D'Amours
March 2014 AER
https://www.aeaweb.org/articles.php?doi=10.1257/aer.104.3.898

In this paper the authors investigate a way to generalize the use of network pattern in a large class of games. They find a striking result that a global characteristic of a network, the lowest eigenvalue, determines the equilibria of the game (where agents have linear best replies, like a public good game) on it. This is because the lowest eigenvalue captures the cumulative effects of agents’ actions on others. In this regard, direct substitute effect transmitted by links causes ups and downs of actions (For example, one providing more public goods makes his neighbor free ride and his neighbor’s neighbor providing more). When the lowest eigenvalue is large in magnitude, the ups and downs lead in several directions and there can be multiple equilibria. When it’s small, on the other hand, the network dampens the ups and downs to converge to a unique equilibrium.

As any n-player simultaneous-move game can be described as a network game by a matrix indicating interactions among the players, this paper provides a new way to study multiple equilibria in games and largely broadens the area of games on networks. Based on this work, not only lab experiment but also field data can be applied in order to dig more in network effects in social and economic life, like diffusion of information and micro-finance.

Tobias Regner
May 2014, Games and Economic Behavior
http://www.sciencedirect.com/science/article/pii/S0899825614000189

The author analyzes pricing, effort and tipping decisions at the online service “Google Answers” where users set a price for a question ex ante and can additionally tip the researcher who provides the answer ex post. Usually a positive wage-effort correlation can be found in similar settings, which can be explained by either reciprocity or reputation incentive. The field data provides evidence for both explanations.
Reciprocity:

• A substantial amount of single users tip and the tendency to tip is positively correlated with effort.
  
• The users have three typical types: myopic, strategic and reciprocal and the decision of tipping has significant gap among the three.
  

Reputation concerns with Bayesian updating:

• The tendency to tip increases with the frequency of use.
  
• The tip rate of frequent users in their last question is higher than the tip rate of single users.
  
• Effort choices depend on past behavior of the user.
  

See Dufwenberg and Kirchsteiger (2004) for theory of sequential reciprocity and Kreps et al. (1982) for theory of reputation with Bayesian updating.

The tragedy of the commons in a violent world
Petros G. Sekeris

This is a recently published paper (RAND July 2014). 
Conclusion and contribution:

• In this paper the author introduces the possibility of appropriating the resource by violent means into the standard natural resource exploitation game. In this model the unique equilibrium is exploitation when the resource is abundant and conflict when it’s scarce. That is the cooperative outcome is no longer subgame perfect. 
  

Model setting:

Note 1: 

• Earlier theoretical works have shown that the tragedy of the commons (and also all kinds of prisoner’s dilemma) may be resolved by interaction in repeated games (About this, check Folk theorems for dynamic games in these papers: Aumann and Shapley 1976, Rubinstein 1979, Fudenberg and Maskin 1986, Fudenberg, Levine and Maskin 1994.
  

Note 2:

• For examples of conflict literature, check Acemoglu, Golosov, Tsyvinski and Yared 2012, Jackson and Morelli 2009.
  

 Carmen M. Reinhart, Kenneth S. Rogoff
 http://www.nber.org/papers/w19823

This is a NBER working paper in Jan 2014, and recently published in AER (May 2014). Notably, it’s a purely descriptive work. The authors examine the evolution, including duration, severity and recovery of real per capita GDP around 100 systemic banking crises. On average, it takes about eight years to reach the pre-crisis level of income; the median is about 6 ½ years. They specifically investigate the 2007-2009 recessions and find only Germany and the US (out of 12 systemic cases) have reached their 2007-2008 peaks in real income after five to six years. Forty-five percent of the episodes recorded double dips. Postwar business cycles are not the relevant comparator for the recent crises in advanced economies.

Zinovyeva, Natalia and Bagues, Manuel

https://www.aeaweb.org/aej-applied/accepted_single.php?id=1649&jrnl=app

This is a forthcoming paper (AEJ: applied economics). This paper analyzes how one’s connections affect his academic promotion and academic success. The authors use evidence from centralized selection exams in Spain, where evaluators are randomly assigned to promotion committees, and find that the channel would be both evaluators’ private information and subjective biases if he’s an acquaintance of the candidate. 

It turns out that connection in committee has a significantly positive influence in promotion (from assistant to associate professor and from associate to full professor).  However, in terms of selection efficiency, it depends on type of connections. For those evaluated by strong tied acquaintances like the Ph.D. advisor, a colleague or a co-author, evaluation biases dominate the information advantages and the following academic performance would be worse. Weaker links like presence in thesis committee, on the other hand, may improve the efficiency of selection process because the candidates have better achievements in the following years (such as more publications and citations).

This is a recent NBER working paper (July 2014). Using meteorological data (about every country’s exposure to the universe of tropical cyclones during 1950-2008), the authors find hypotheses that disasters stimulate growth or short-run losses disappear following migrations or wealth transfers are rejected. National incomes do not recover within 20 years.
Authors: Solomon M. Hsiang and Amir S. Jina
Link: http://www.nber.org/papers/w20352.pdf
Comment: Can earthquake data be applied here?
 

This is a recently published paper (QJE May 2014).  Using new data the authors test whether medieval universities played a causal role in expanding economic activity. They use establishment of markets in Germany to measure economic development and distance to Germany’s first universities (founded shortly after 1386) to measure university influence and find the answer is yes (Of course, spatial endogeneity is taken into account). Furthermore, the channel for the impact might be like this: legal institutions are important for development in Medieval Europe and the universities’ establishment allows large scale of training for jurists.
Author: Davide Cantoni and Noam Yuchtman
Link: http://qje.oxfordjournals.org/content/129/2/823.full.pdf
Comment: Can this strategy be applied in the recent studied topic by Yuyu Chen and Se Yan?

This paper is published in Economic Letters recently (available online July 14, 2014). Using publicly available academic records in US chemistry department, the author investigates factors influencing return migration decisions by foreign scientists. It turns out that gender matters (females are less likely to return), GDP per capita difference matters (higher home country wage increases probability for returning), US B.S. degree matters, and productivity matters (outstanding professors tend to return with higher probability, but top Ph.D. program and top job placement are not significant).
Author: Patrick Gaulé
Link: http://www.sciencedirect.com/science/article/pii/S0165176514002699
Comment: 
1. It makes me so sad that China has a rather low odd ratio. 
2. The empirical part is not convincing enough. For one thing, average chemistry faculty wage would be much more persuasive than the GDP per capita term. 
3. Actually this topic matters for the topic of development convergence. In terms of academic area, the return ratio determines whether the developing countries can catch up with the developed ones. The return decision would be influenced by income difference (a lot of factors here, including job searching costs and matching issues in home country, influenced by wage difference, research environment difference and peer effect), personal emotion for home country and family reasons.

Yaohui Zhao, 2003 
“The Role of Migrant Networks in Labor Migration: The Case of China”, Contemporary Economic Policy, Vol. 21, No. 4, pp. 500-511

Motivation:

• To investigate the role of migrant networks in determining labor migration and the channel which makes it work. 
  

Conclusion & Discussion:

• The more experienced migrants a village has, the more likely it is for others to choose migration. However, the effect disappears once a migrant returns home.  
  

Contribution:

• It provides a village level measure of migration networks which goes beyond the household or individual level measure of direct kinship.
  
• It considers characteristics for a (potential) migrant in three levels: individual level, household level, and village level, to discompose the influence on migration through all channels. 

Measure:  

This paper is a NBER working paper in October 2010. It uses a new data set from an online adoption facilitator to estimate the preferences of potential adoptive parents over children relinquished for adoption. There seem to be significant preferences on girls, unborn children close to birth and against African-American children. All of which vary in magnitudes across adoptive parents’ type: heterosexual, homosexual, and single women.
Authors: Mariagiovanna Baccara, Allan Collard-Wexler, Leonardo Felli, Leeat Yariv 
Link: http://www.nber.org/papers/w16444

This paper is published in Journal of Economic Behavior & Organization recently (available online July 14, 2014). Using immigrant data in 29 European countries with ancestry in 87 nations, the author find significant intergenerational transmission of trust and mothers have higher influence than fathers. In addition, high enough trust can be transmitted even in low trust environment.
Author: Martin Ljunge
Link: http://www.sciencedirect.com/science/article/pii/S0167268114002029
Comment: 1. Basically it means that in terms of trust parents and ancestors are more important than environment. 2. Difference between mother and father is easy to understand: mothers usually spend more time on educating kids. 3. What i'm curious about now is how does the pattern of trustworthiness look like.  

Yuan Zhang and Ming Lu, 2009 (in Chinese)
“Can Social Networks Increase Migrant Workers’ Wages?”, Management World, No. 3, pp. 45~54

Motivation:

• Whether and how will migrant workers’ social networks influence their wage?
  

Conclusion& Discussion:

• Migrant workers’ social networks have rare direct impact on their wages.
• Social networks can affect wages by changing opportunities to different job types.
• The reason is as below. Most migrant workers in China are working in low-skilled industry, where competitiveness is relatively high and the role of diminishing information asymmetry by social networks has little influence.

Contribution:

• The correlation between social network and wage is often observed. But social network itself has a problem of endogeneity as people with higher wages might have higher willingness and ability to invest in their social capital such as relative or friend networks. This article uses two instrument variables to solve this problem. One is whether the hometown was Communist-controlled Area(革命老区) during the Republican and Chinese Civil War era (1920s~1940s), and the other one is whether one’s parents or grandparents were classified as “Black Class”(黑色阶级) during the Land Reform movement (1950s).

Measure:

Yuan Zhang, Rui Li, Hou Wang and Liang Chen, 2008 (in Chinese)
“Social Networks and Wages: Empirical Evidence from Migrant Workers in China”, World Economic Papers, No. 6, pp. 74~84.

Motivation:

• Whether and how will migrant workers’ social networks influence their wage?

Conclusion & Discussion:

• Migrant workers’ social networks at both community level and household level have rare direct impact on their job opportunities and wages.
  
• Social networks at household level can increase mobility of migrant workers, so that they can migrate for longer distance and get more and better job opportunities. 

Contribution:

• This paper finds that social networks at household level have only indirect effect on migrant workers’ wages. It further points out that the mechanism for this indirect effect is to give migrant workers more opportunities by diminishing costs for longer-distance migration.

Measure:

This is a recently published paper (QJE, online by May 2014). By conducting experiments among secondary school students in the Netherlands, the authors investigate whether gender difference in competitiveness contributes to gender difference in track choice. They find that boys are more competitive and conditional on academic ability boys choose substantially more prestigious academic tracks (more math and science intensive). The gender difference in competitiveness accounts for 20% of the gender difference in track choice.
Authors: Thomas Buser, Muriel Niederle, Hessel Oosterbeek
Link:  http://web.stanford.edu/~niederle/BNO.QJE.pdf