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Necessity Is the Mother of Isomorphism: Poverty and Market Creativity in Panama
Sociology of Development
Abstract
Does poverty hinder or encourage market creativity? Businesses that offer novel, creative products have greater growth potential than businesses that conform to market norms. Yet the literature offers conflicting views on the relationship between poverty and market creativity. Some research suggests poverty restricts entrepreneurs’ capacity to offer novel products, whereas other work suggests poverty facilitates creativity in the marketplace. This paper addresses that tension by examining the shifting relationship between poverty and market creativity across stages of business development. Drawing on survey and interview data from Panama, this paper shows how entrepreneurs are both catalyzed and constrained by conditions of poverty. Poor individuals actively generate novel venture concepts in the early stages of business development. In later stages, however, they struggle to sustain those novel businesses. Ultimately, poverty limits entrepreneurs’ capacity to profit from the creativity they bring to the marketplace. This paper elucidates the dual relationship between poverty and creativity, and helps explain why economic mobility via self-employment proves elusive for the poor.
... For example, education has been one of the most important drivers of increasing higher income shares for poorer households, with educational access also lifting the poverty elasticity of economic growth and economic growth itself (Dabla-Norris et al., 2015). Increased financial inclusion, rather than simply capital deepening, also can play an important role by encouraging innovation and growth by giving poorer entrepreneurs the credit access they need to progress their ideas (Doering, 2016). ...
... Such findings are also in consonance with research from Ravallion (2012), characterising Sub-Saharan Africa economies as being stuck in a "poverty-trap", suggesting that high poverty levels weaken resilience to economic shrinking in the first instance. If poverty reduction also helps to release more entrepreneurs into the workforce (Doering, 2016), then we can easily see how lower levels of poverty can help build resilience to economic shrinking but also stimulate economic growth. Arguably, poverty alleviation has a dual effect as a mechanism on both resilience to shrinking and higher growth rates. ...
Purpose
With the recognition that generating economic growth is not the same as sustaining it, the challenge to catch-up and growth literature is discerning between these processes. Recent research suggests that the decline in the frequency of “shrinking” episodes is more important for long-term development than higher growth rates. By using a framework centred around social capabilities, this study aims to investigate the effects of income inequality and poverty on economic shrinking frequency, as opposed to previous literature that has exclusively had a growth focus. The aim is to investigate how and why some societies might be more resilient to economic shrinking.
Design/methodology/approach
The research is a quantitative study, and the authors build a longitudinal data set including 23 developing countries throughout 42 years to test the paper’s purpose. This study uses country and period fixed-effects specifications as well as cross-sectional graphical representations to investigate the relationship between proxies of economic inclusivity and the frequency of shrinking episodes.
Findings
The authors demonstrate that while inclusive societies are more resilient to shrinking overall, it is changes in poverty levels, but not changes in income inequality, that appear to be correlated with economic shrinking frequency. Inequality, while still an important element to explain countries’ growth potential as an initial condition, does not seem to make the sample more resilient to shrinking. The authors conclude that the mechanisms in which poverty and inequality are correlated with the catch-up process must run through different channels. Ultimately, processes that explain growth may intersect but not always overlap with the ones that explain resilience to shrinking.
Originality/value
The need for inclusive growth in long-term development has been championed for decades, yet inclusion has seldom been explored from the shrinking perspective. Though poverty reduction is already an important mainstream political objective, this paper differentiates itself by providing an alternate viewpoint of why this is important. Income inequality could have more of an economic growth limiting effect, while poverty reduction could be required to build resilience to economic shrinking. Developing countries will need both growth and resilience to shrinking, to catch-up with higher-income economies, which policymakers might need to balance carefully.
... The present research addresses these calls by examining how social enterprises manage partnerships with other organizations that have related or distinct guiding logics and, ultimately, how social enterprises use partnerships to transfer innovations across geographic boundaries. In this sense, the article interrogates knowledge transfer processes across inequities of power, resources, market access, and governance (Wijers 2019;Piatti and Dwiartama 2016;Doering 2016;Seelos and Mair 2010;Hodge and Greve 2007), though it explores these issues in the relatively unique context of a "South-to-South" collaboration between organizations in India and in Paraguay. The article makes three contributions. ...
... In particular, the on-the-ground partnership between Fundación Visión and Fundación Paraguay allowed the former organization to utilize and country-wide network developed for the microfinance context to access greater numbers of potential patients for its eye care services. While there were clashes with respect to the social motivation of Fundación Paraguaya's approach, which sought to promote microenterprise approaches to addressing poverty (Doering 2016), versus the more spiritually-grounded social motivation of Fundación Visión, ultimately this "making do" with available resources allowed the expansion of Aravind's approach to delivering eye care services to Paraguay. In this sense, by highlighting the possibility of instead "scaling solutions" (Dees et al 2004) through inter-organizational partnership as a means to achieve similar impact, the study puts forward novel approaches that organizations may undertake to address the issue of increased impact. ...
This study examines the process of knowledge transfer between a pair of social enterprises, organizations that are embedded in competing social and economic logics. Drawing on a longitudinal case study of the interaction between social enterprises operating in emerging economy settings, it uncovers factors which influence the transfer of a social innovation from a dense, population-rich setting to one where beneficiaries are geographically dispersed and the costs of service delivery are correspondingly elevated. Evidence from the case study suggests that institutional bricolage—the crafting of improvised solutions in resource-constrained settings—can serve as potent driving force in driving innovation transfer, and that this process of re-combining available resources may be facilitated by the extent to which the values between partner social enterprises are aligned. With such alignment, social enterprise partners may be able to increase trust, develop a smoother knowledge-transfer process, and find practical solutions which facilitate the transfer of life-enhancing social innovations to neglected rural settings.
... Loan products are easily available and instalments are to be paid frequently and immediately (often starting within a week, or at most month, of getting the loan)which requires the enterprise to yield a steady cash flow. Microenterprises are not only capitalconstrained but suffer from short-term economic pressures, which means that the poor tend to bring under-developed businesses to market (Doering, 2016), and lack access to social structures and relevant experience that are vital for entrepreneurs (Aldrich and Cliff, 2003;Eesley and Wang, 2017;Hernández-Carrión, Camarero-Izquierdo, and Gutierrez-Cillan, 2017;Kotha and George, 2012). Moreover, "templates" for building an enterprise are either not readily available or are less effective in the absence of supporting social networks for knowledge transfer (Sutter, Kistruck, and Morris, 2014). ...
... In addition to the above controls, we also include loan officer fixed-effects to account for any differences in how they might implement credit appraisal and other policies (Doering, 2016;Drexler and Schoar, 2014;Canales and Greenberg, 2016) as well as any differences in propensity to give different kinds of loans based on personal characteristics like skill, risk aversion or overconfidence (Cole, Kanz, and Klapper, 2016). All models use robust standard errors, clustered on the client, to make sure that our inferences are conservative. ...
... Research shows that poverty reduces cognitive performance, possibly because poverty-related concerns consume mental resources (Mani et al., 2013). Poverty also appears to limit entrepreneurs' ability to profit from the creativity they bring to the marketplace (Doering, 2015). Gig workers who identify as entrepreneurs are more likely to have the financial capital to support entrepreneurial dreams (Ravenelle, 2019). ...
Purpose
Unlike the effect of management styles on employee attitudes, little is known about the effect of managerial assumptions on workers within the gig economy. The purpose of this paper is to utilize McGregor’s Theory X and Theory Y as a framework to discuss two gig economy platforms and how their differing management assumptions affect worker perceptions of themselves as entrepreneurs.
Design/methodology/approach
The author utilized qualitative interviews and demographic surveys with 41 contract workers from TaskRabbit, a personal assistant platform, and Kitchensurfing, a “rent-a-chef” service, to examine the impact of differing management assumptions on independent contractor perceptions of themselves as entrepreneurs.
Findings
The Theory X management assumptions and correlated behaviors directly contradict the entrepreneurial ethos marketed by the platforms, resulting in a psychological contract violation for workers and negative responses to the platform. In comparison, Theory Y managerial assumptions and correlated behaviors can be utilized to encourage worker innovation, creativity and sense of self as an entrepreneur.
Practical implications
As the gig economy continues to grow, algorithms are likely to take on increased importance as a management tool. Although some have suggested that such algorithms may reduce the impact of a capricious manager, the fact remains that algorithms are created by management. If the gig economy intends to encourage entrepreneurship, additional attention must be paid to how differing management assumptions, and their resulting behaviors and algorithms, affect worker attitudes and experience.
Originality/value
This study represents one of the initial academic investigations into how the Theory X and Theory Y management assumptions and correlated perspectives may be applied to independent contractors within the gig economy. Additionally, this study is among the first to examine how gig worker attitudes toward platform firms, and views of themselves as entrepreneurs, are affected by algorithm-implemented management policies.
This handbook presents a must-read, comprehensive and state of the art overview of sustainable diets, an issue critical to the environment and the health and well-being of society.
Sustainable diets seek to minimise and mitigate the significant negative impact food production has on the environment. Simultaneously they aim to address worrying health trends in food consumption through the promotion of healthy diets that reduce premature disability, disease and death. Within the Routledge Handbook of Sustainable Diets, creative, compassionate, critical, and collaborative solutions are called for across nations, across disciplines and sectors. In order to address these wide-ranging issues the volume is split into sections dealing with environmental strategies, health and well-being, education and public engagement, social policies and food environments, transformations and food movements, economics and trade, design and measurement mechanisms and food sovereignty. Comprising of contributions from up and coming and established academics, the handbook provides a global, multi-disciplinary assessment of sustainable diets, drawing on case studies from regions across the world. The handbook concludes with a call to action, which provides readers with a comprehensive map of strategies that could dramatically increase sustainability and help to reverse global warming, diet related non-communicable diseases, and oppression and racism.
This decisive collection is essential reading for students, researchers, practitioners, and policymakers concerned with promoting sustainable diets and thus establishing a sustainable food system to ensure access to healthy and nutritious food for all.
Inspiring sustainable diets and cultivating diets that are inspiring are the ambitious endeavours of this collection. This introductory chapter lays out a framework for sustainable diets and the complex issues, diversity of stakeholders, and diversity of levels of privilege (or the obvious, and not so obvious, ways injustices intersect with food systems) that are involved. This chapter offers a definition of sustainable diets and touches on strategies for increasing healthy food for all while preserving and rebuilding local, regional, and international food systems inspired by principles of rejuvenation, justice, vitality, and optimising resources for the betterment of all life forms, in current and future generations.
Small unregistered firms contribute to a substantial proportion of global economic activity, particularly in developing regions. In explaining variation in productivity in these types of informal firms, research has focused primarily on the adoption of effective business practices and access to capital, with little focus on fundamental positioning. This article explores the nature of differentiation in microenterprises, introducing a text‐based measure of differentiation using state‐of‐the‐art sentence embeddings. Using a combined sample of nearly 10,000 microenterprises across eight developing countries, I examine whether (and which) microenterprises differentiate, whether differentiation is related to performance (and for whom), and whether any existing policy interventions affect differentiation. Small unregistered firms contribute to a substantial proportion of global economic activity, particularly in developing regions. In studying how to improve the productivity of these types of tiny firms, researchers and policy makers have primarily focused on business practices and access to capital, rather than the fundamental market position of the product or service offered. This article explores the extent to which microenterprises differentiate themselves from peer businesses, introducing a measure of differentiation based on computational text analysis. Using a combined sample of nearly 10,000 microenterprises across eight developing countries, I examine whether (and which) microenterprises differentiate, whether differentiation is related to performance (and for whom), and whether any existing policy interventions affect differentiation.
Consensus holds that large businesses and their organizations can exert significant political influence; however, our understanding of how microenterprises and their organizations wield influence—or not—lags far behind. In fact, scholars have drawn opposing conclusions about microenterprises’ organizational capacity to shape policy. One view is that small firms face barriers to collective action and are incapable of effectively advocating for policies that suit them. An alternative view is that they are sufficiently influential to stymie the implementation of unfavorable policies outright. This paper refines our understanding of the organizational influence of microenterprises by arguing that these two views are not incompatible. By distinguishing (1) between “defiant” and “negotiated” behaviors and (2) between advocacy at local and national levels, I make the case that clusters of microenterprises can be both effective at resisting policy intervention at the local level and unable to bring political pressure on national policymaking. Focusing on the area of environmental and labor regulation, I present schematic descriptions of this dynamic in three industries that are dominated by geographically clustered microenterprises in Mexico: brickmaking, leather tanning, and ceramics production.
Research Summary
There continues to be substantial debate on whether and how providing inclusive access to finance through microcredit promotes entrepreneurship‐led development at the base of the pyramid. We contribute to this literature by examining differences in household‐level outcomes associated with microfinance loans given for different purposes, and identifying conditions under which the most impact is achieved. Defying common expectations, loans funding microenterprises do not exhibit greater impact than those funding traditional livelihood activities, and loans funding new microenterprises fare particularly poorly. But loan impact improves when multiple members of a borrower group seek livelihood loans together, and when the provided loans better match the individual financial needs of the borrowers. Our findings underscore the need to refine how microfinance is applied as a tool for development.
Managerial Summary
Comparing across microfinance loans given for different purposes, we find that the average impact associated with loans supporting traditional livelihoods is at least as high as that for loans supporting microenterprises, and that the impact of loans specifically funding new microenterprises is lower than those for growing existing microenterprises. We also find that the impact of livelihood loans is greater when multiple members of a borrower group are engaged in livelihood‐focused activities, and that loans that better match borrowers’ specific needs have a superior impact. We conclude that we need to move beyond the black‐or‐white debate regarding whether microfinance works to a nuanced understanding of when it is effective, i.e., examining conditions under which microcredit customers – whether aspiring entrepreneurs or not – can thrive.
Self-employment is an important component of many development strategies aiming to enhance earnings and employment among low-income populations. However, women tend to earn less than men through self-employment, calling into question the effectiveness of self-employment as a tool for bolstering women's earnings. In this paper, we identify a novel intervention that boosts women's returns from self-employment and narrows the gender earnings gap in an informal, residential market. We argue that micro-spatial resources offer gender-specific advantages to female business owners. We show how gendered constraints on women's labor market activity intersect with spatial resources to influence their likelihood of running a business and their self-employment earnings. Using data from a Colombian public housing complex, we find that the randomly assigned location of a resident's apartment significantly influences women's business activity, but not men's. Women who run informal, home-based businesses from favorable locations earn more than twice as much as comparable women, narrowing the gender earnings gap by 58.5% and earning an income that lifts them above the poverty line. This study offers a new perspective on how gender and micro-geography intersect to shape self-employment. More broadly, it reveals how an important but often-overlooked factor, micro-spatial variation, influences economic development.
We used the techniques of event-history analysis to examine the speed with which newly founded organizations ship their first products for revenues, an important entrepreneurial event. In a longitudinal study of new ventures in the U.S. semiconductor industry, we found that substantial technological innovation lengthens development times and reduces the speed with which first products reach the marketplace. Organizations that undertook lower levels of technological innovation, had relatively lower monthly expenditures, whose founding organization structures included both a manufacturing and a marketing position, that had more competitors in the marketplace, and were founded in the Silicon Valley region of the U.S. shipped their first product for revenues significantly faster than other new ventures. Since several theoretical perspectives were utilized, results indicate that it is worthwhile to synthesize from several perspectives in order to understand the timing of entrepreneurial events. Implications for theory and future research on new organizations are discussed.
Most social scientists, policymakers, and citizens who support the welfare state do so in part because they believe social-welfare
programs help to reduce the incidence of poverty. Yet a growing number of critics assert that such programs in fact fail to
decrease poverty, because too small a share of transfers actually reaches the poor, or because such programs create a welfare/poverty
trap, or because they weaken the economy. This study assesses the effects of social-welfare policy extensiveness on poverty
rates across fifteen affluent industrialized nations over the period 1960–91, using both absolute and relative measures of
poverty. The results strongly support the conventional view that social-welfare programs reduce poverty.
For all its richness and potential for discovery, qualitative research has been critiqued as too often lacking in scholarly rigor. The authors summarize a systematic approach to new concept development and grounded theory articulation that is designed to bring “qualitative rigor” to the conduct and presentation of inductive research.
Using ethnographic and survey data on low-income families residing in Boston, Chicago, and San Antonio, we examine the relationship between women's patterns of union formation and their experience of physical and sexual abuse. Both sets of data suggest that women who have been physically or sexually abused are substantially less likely to be married or to be in stable, long-term cohabiting relationships. The data also suggest that the timing and different forms of abuse may have distinctive associations with union formation. Women who have experienced abuse beginning in childhood, particularly sexual abuse, are less likely to be in sustained marriages or stable cohabiting relationships and instead are more likely to experience transitory unions: multiple short-term, mostly cohabiting unions with brief intervals between them. Women who have not been abused in childhood but experience adult physical abuse, however, are less likely to be in either a marriage or a cohabiting union, long-term or transitory; and some have withdrawn from having relationships with men. The relevance of these findings for the decline of marriage among low-income women and men is discussed.
There has been rapid growth in the study of diffusion across organizations and social movements in recent years, fueled by interest in institutional arguments and in network and dynamic analysis. This research develops a sociologically grounded account of change emphasizing the channels along which practices flow. Our review focuses on characteristic lines of argument, emphasizing the structural and cultural logic of diffusion processes. We argue for closer theoretical attention to why practices diffuse at different rates and via different pathways in different settings. Three strategies for further development are proposed: broader comparative research designs, closer inspection of the content of social relations between collective actors, and more attention to diffusion industries run by the media and communities of experts.
We examine various approaches to explaining ethnic enterprise, using a framework based on three dimensions: an ethnic group's access to opportunities, the characteristics of a group, and emergent strategies. A common theme pervades research on ethnic business: Ethnic groups adapt to the resources made available by their environments, which vary substantially across societies and over time. Four issues emerge as requiring greater attention: the reciprocal relation between ethnicity and entrepreneurship, more careful use of ethnic labels and categories in research, a need for more multigroup, comparative research, and more process-oriented research designs.
Innovation consists of a set of tasks carried out at the micro-level by individuals and groups of individuals within an organization. These microprocesses are in turn stimulated, facilitated, and enhanced-or the opposite-by a set of macro-level conditions. Some of these structural and social factors are more important at certain stages than at others. This paper suggests that a dynamic model of innovation is needed which connects the major tasks in the innovation process to those structural arrangements and social patterns which facilitates each. Four major innovation tasks are discussed: (1) idea generation; (2) coalition building; (3) ideal realization; and (4) transfer, or diffusion. The importance of flexibility, breadth or reach, and, particularly, integration are emphasized.
This book examines technological advance and market regulation in the health industries of nations such as India, Brazil, South Africa, Nigeria, and China. Pharmaceutical and life science industries can reinforce economic development and industry growth, but not necessarily positive health outcomes. Yet well-crafted industrial and health policies can strengthen each other and reconcile economic and social goals. This book advocates moving beyond traditional market failure to bring together three uncommonly paired themes: the growth of industrial capabilities, the politics of health access, and the geography of production and redistribution.
Social capital theorists have shown that inequality arises in part because some people enjoy larger, more supportive, or otherwise more useful networks. But why do some people have better networks than others? This book argues that the answer lies less in people's deliberate “networking” than in the institutional conditions of the churches, colleges, firms, gyms, and other organizations in which they happen to participate routinely. This book introduces a model of social inequality that takes seriously the embeddedness of networks in formal organizations, proposing that what people gain from their connections depends on where those connections are formed and sustained. The model is illustrated and developed through a study of the experiences of mothers whose children were enrolled in New York City childcare centers. As a result of the routine practices and institutional conditions of the centers—from the structure of their parents' associations, to apparently innocuous rules such as pick‐up and drop‐off times—many of these mothers dramatically increased their social capital and measurably improved their wellbeing. Yet how much they gained depended on how their respective centers were organized. This book identifies the mechanisms through which childcare centers structured the networks of mothers, and shows that similar mechanisms operate in many other routine organizations, from beauty salons and bath houses to colleges and churches. The book makes a case for the importance of organizational embeddedness in the study of personal ties.
Today it is not uncommon to find items in department stores that are hand-crafted in countries like Thailand and Costa Rica. These "traditional" crafts now make up an important part of a global market. They support local and sometimes national economies and help create and solidify cultural identity. But these crafts are not necessarily indigenous. Whereas Thailand markets crafts with a long history and cultural legacy, Costa Rica has created a local handicraft tradition where none was known to exist previously. In Global Markets and Local Crafts, Frederick F. Wherry compares the handicraft industries of Thailand and Costa Rica to show how local cultural industries break into global markets and, conversely, how global markets affect the ways in which artisans understand, adapt, and utilize their cultural traditions. Wherry develops a new framework for studying globalization by considering the phenomenon from the perspective of the supplier instead of the market. Drawing from interviews and extensive fieldwork shadowing artisans and exporters in their daily dealings, Wherry offers a rare account of globalization in motion-and what happens when market negotiations do not proceed as planned. Considering economic and political forces, flows of people and materials, and frames that define cultural and market situations as they play out in the artisan communities of these two countries, Wherry uncovers how authentic folk tradition is capitalized or created.
Social capital theorists have shown that inequality arises in part because some people enjoy larger, more supportive, or otherwise more useful networks. But why do some people have better networks than others? This book argues that the answer lies less in people's deliberate "networking" than in the institutional conditions of the churches, colleges, firms, gyms, and other organizations in which they happen to participate routinely. This book introduces a model of social inequality that takes seriously the embeddedness of networks in formal organizations, proposing that what people gain from their connections depends on where those connections are formed and sustained. The model is illustrated and developed through a study of the experiences of mothers whose children were enrolled in New York City childcare centers. As a result of the routine practices and institutional conditions of the centers - from the structure of their parents' associations, to apparently innocuous rules such as pick-up and drop-off times - many of these mothers dramatically increased their social capital and measurably improved their wellbeing. Yet how much they gained depended on how their respective centers were organized. This book identifies the mechanisms through which childcare centers structured the networks of mothers, and shows that similar mechanisms operate in many other routine organizations, from beauty salons and bath houses to colleges and churches. The book makes a case for the importance of organizational embeddedness in the study of personal ties.
Although social isolation has been posited as a critical structural mechanism linking neighborhood disadvantage to the reduced
life chances of inner-city residents, there have been few empirical tests of this proposition. We examine the relative importance
of neighborhood poverty and individual and family characteristics on social-network composition and community organizational
participation of inner-city Chicago African American families. The results of the multilevel analysis indicate that, while
most of the variation in isolation outcomes is due to individual-level respondent characteristics, social-network composition
and some forms of organizational participation are affected by neighborhood poverty. Implications of the findings and directions
for future research are discussed.
We explore the impact of reduced transaction costs on risk sharing by estimating the effects of a mobile money innovation on consumption. In our panel sample, adoption of the innovation increased from 43 to 70 percent. We find that, while shocks reduce consumption by 7 percent for nonusers, the consumption of user households is unaffected. The mechanisms underlying these consumption effects are increases in remittances received and the diversity of senders. We report robustness checks supporting these results and use the four-fold expansion of the mobile money agent network as a source of exogenous variation in access to the innovation.
We examine how self-employment among Asian and Hispanic immigrants is affected by family composition and human capital/class resources. Because of collective interests and strong personal ties, the family facilitates the pooling of labor power and financial resources. Enterprising immigrants draw on these resources when establishing and operating small businesses. Our findings also show the importance of human capital/class resources in accounting for immigrant self-employment. Although foreign-earned human capital is usually not highly valued in the host labor market, immigrants successfully use this human capital to achieve business ownership. Interethnic variation in personal human capital and family composition accounts for a substantial portion of the observed interethnic variation in self-employment.
This article examines the relationship between work and welfare in poor, female-headed families by tracing the process through which single mothers work their way off welfare. Analysis is based on monthly data from the Panel Study of Income Dynamics (PSID) for the years 1984-86. The results reveal substantial labor market activity among single mothers on welfare not previously found in studies of welfare dynamics analyzing annual data. A majority of women work while they are on welfare, and more than two-thirds of welfare exits occur through work. Human capital investments are key determinants of welfare exits through work, while a large family size impedes particularly rapid job exits from welfare.
The manner in which status influences the trial of innovations in agriculture has important implications for agrarian development policy. Analysis of data from samples of cultivators in 84 agrarian communities in Andhra Pradesh, India, found little support for Cancian's theory that rank inhibits risk-taking, even under conditions specified as necessary for such effects. Analysis of variance results suggested that increases in status among the poor might result in as much or more of the innovation expected to increase food production as would the present concentration of new opportunities among the rich. While these results appeared to be fairly consistent across different kinds of communities, innovation increased with increased inequality in the distribution of wealth (controlling for the effects of individual status). However, knowledge in inequality slightly inhibited innovation, apparently because relatively simple information about modern farming practices was widely diffused.
Policy reforms and rising income inequality transformed educational and economic opportunities for Americans approaching midlife in the 1990s. Rising income inequality may have reduced mobility, as income gaps increased between rich and poor children. Against the effects of rising inequality, Civil Rights reforms may have increased mobility, as opportunities expanded across cohorts of black students and workers. We compare educational and income mobility for two cohorts of black and white men, the older born in the late 1940s and the younger born in the early 1960s. We find that educational mobility increased for black men, but income mobility declined for both races. Economic mobility declined despite unchanged or improved educational mobility because of increased returns to schooling and increased intergenerational income correlations, independent of schooling.
Immigration is perceived as both boon and bane in host countries. Yet, whether immigration promotes, or undermines, economic development remains an empirical question. Using cross-national data for up to 122 countries, this paper tests whether cumulative immigration flows raise aggregate living standards in the long term. The results strongly support the hypothesis. Immigration, however, is not uniformly beneficial for all countries. A sub-analysis of the Latin American and Caribbean region reveals that immigration is less beneficial in the context of higher fertility rates. The results are discussed in the context of migration research and policy at the national and international levels.
High levels of economic inequality found in less developed countries have been attributed to the penetration of their economies by investments of multinational enterprises based in more developed nations of the West. This attribution has been widely supported by both historical and quantitative research. There are several interpretations concerning why this might be so, but the one offered here is that foreign investments cause high levels of inequality by distorting the evolution of the labor-force structure. It is suggested that Third World economies penetrated by foreign capital will have unusually rapidly growing proportions of the labor force employed in the tertiary, and it is growth of this proportion which mediates some of the effects of dependence on inequality. Our quantitative analysis of cross-national data (a) corroborates previous research linking dependence to inequality, (b) indicates that dependence is associated with growth of the tertiary, and (c) suggests this is one important link between dependence and inequality.
This article uses panel data from the Survey of Income and Program Participation (SIPP) and the European Community Household Panel (ECHP) for a comparative analysis of workers' post-unemployment earnings trajectories in the United States and 12 Western European countries. Across the study sample of industrialized countries, results of difference-in-difference propensity score matching show post-unemployment earnings losses to be largely permanent and particularly significant for high-wage and older workers as well as for women. The analyses also show that negative effects of unemployment on workers' subsequent earnings are mitigated through either generous unemployment benefit systems or strict labor market regulation. These effects stem partly from favorable behavioral responses that prevent downward occupational and industrial mobility and partly from changes in the overall structure of labor markets favoring the transferability of worker skills between jobs. These positive effects materialize despite the fact that labor market policies tend to successfully protect the core work force from experiencing a job loss in the first place.
This article examines the impact of gender on the relative economic success of microentrepreneurs, their contributions to family income, and the impact of gender ideology and income on household decision making. The concept of economic success is problematized by examining how these businesses, even those of limited assets and income generation, offer women increased autonomy in household budgetary matters and decision making. The analysis draws on data from a representative survey of 201 male and female microentrepreneurs in the Dominican Republic. The findings show that household decision making is influenced by variations in economic power but that gender ideologies structure the direction and extent of this influence, reflected in distinct “gender thresholds,” or the point at which income contributions start to matter.
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Very few, if any, empirical studies have been conducted on innovation in technology-based start-up firms in Japan, mainly because there has been little up-to-date data on such firms, and because small firms in Japan have been viewed as being of minor economic importance. The purpose of this article is to fill this gap in the literature by examining the determinants of innovation, measured by patent applications and new products, in Japanese technology-based start-up firms, using original firm-level data. We examine these determinants from the viewpoint of both firm-leveland managerial-levelcharacteristics. Our findings indicate that technological capability, the availability of internal funds, venture capital funding, and university–industry linkages are important firm-level determinants of innovation. We find also that a CEO’s educational background and capacity for networking with researchers are important managerial characteristics. The article includes an overview of the general business context for start-up firms in Japan and it concludes with some considerations for future policy based on our findings.
Discussions of inner-city social dislocations are often severed from the struggles and structural changes in the larger society, economy, and polity that in fact determine them, resulting in undue emphasis on the individual attributes of ghetto residents and on the alleged grip of the so-called culture of poverty. This article provides a different perspective by drawing attention to the specific features of the proximate social structure in which ghetto residents evolve and try to survive. This is done by contrasting the class composition, welfare trajectories, economic and financial assets, and social capital of blacks who live in Chicago's ghetto neighborhoods with those who reside in this city's low-poverty areas. Our central argument is that the interrelated set of phenomena captured by the term “underclass” is primarily social-structural and that the inner city is experiencing a crisis because the dramatic growth in joblessness and economic exclusion associated with the ongoing spatial and industrial restructuring of American capitalism has triggered a process of hyperghettoization.
This article presents the results of new data collection in Mexico about the relationship between child well-being and social networks. Two research questions guide the analysis. First, under what conditions do networks generate greater (lesser) support? Second, what kinds of networks are associated with healthier children? We explore the health status effects of several dimensions of social networks, including network size, kinship roles, interaction (proximity, contact, and coresidence), and provision of financial and emotional support. Our key findings suggest that networks containing more extended kin and coresident ties offer greater support resources to mothers with young children, especially among the poorest households. We also find that network structures characterized by more social support and greater interaction with extended, rather than immediate, kin help sustain healthier children. Together these findings indicate the advantages of examining specific role relationships in network research among economically marginalized families and attest to the importance of social networks founded on principles of reciprocity, confianza, and compadrazgo to the well-being of Mexican families.
This study examines state provisioning of social welfare and employment
and its consequences for local economic well-being. Do a larger public
sector and more generous social welfare transfers help or harm local
populations? To address this question, we derive hypotheses from two
competing social policy schools, neoliberal and radical political
economy. We assess how claims from both schools operate on the ground,
through an empirical test using data for county populations for
Keynesian (1970-80) and post-Keynesian (1980-90) decades. Findings do
not support neoliberal views that a leaner and meaner government benefits
U.S. populations. Rather, economic well-being of the population at large
declines where social programs are less generous to poor residents. In
both Keynesian and post-Keynesian periods, the state remains important
in reducing income inequality and, to some degree, in promoting income
growth. Finally, we find important differences within public employment,
with state and local government having less beneficial effects.
We examine high concentrations of poverty in public schools by comparing economic segregation in schools and in their corresponding
attendance boundaries. To do this, we assign poverty rates from the 2000 census to maps of school attendance boundaries for
21 of the largest school districts and link this with data enumerating the number of poor children enrolled in each school.
Results show that percentages of poor children in neighborhood schools is greater than in their corresponding catchment areas
and this difference is greater when the majority of children living in a neighborhood are racial minorities. These patterns
reflect the withdrawal of wealthier children from public schools and into private, charter and magnet schools. The result
is that poor and minority children are much more concentrated in high-poverty public schools than they would be if all children
attended their local schools.
It is widely argued that globalization and economic development are associated with international migration. However, these relationships have not been tested empirically. We use a cross-national empirical analysis to assess the impact of global and national factors on international migration from less-developed countries. An interdisciplinary analytical framework is developed. We then use several modeling techniques to analyze panel data on a set of less-developed countries from 1970 to 2000. Three central findings emerge from these analyses. First, foreign direct investment has a significant, differential effect across sectors of the economy: FDI in the primary sector increases the level of net emigration, while FDI in the secondary sector has a deterrent effect. Second, economic development has a significant, nonlinear effect on net emigration levels, the so-called “migration hump.” Finally, we find a strong cumulative causation effect of migration, meaning that migration has a strong internal momentum after it has been initiated. The implications of the findings are discussed in the context of contemporary migration theory.
Despite three decades of scholarship on economic restructuring in the United States, employers' violations of minimum wage, overtime and other workplace laws remain understudied. This article begins to fill the gap by presenting evidence from a large-scale, original worker survey that draws on recent advances in sampling methodology to reach vulnerable workers. Our findings suggest that in America's three largest cities, violations of employment and labor laws are pervasive across low-wage industries and occupations, affecting a wide range of workers. But while worker characteristics are correlated with violations, job and employer characteristics play the stronger role, including industry, occupation and measures of informality and nonstandard work. We therefore propose a framework in which employers' noncompliance with labor regulations is one axis of a competitive strategy based on labor cost reduction, contributing to the reorganization of work and production in the 21st century labor market.
Innovation implies newness. To define and measure innovation better, we investigated three dimensions of newness: what is new, how new, and new to whom? Drawing on prior research by Schumpeter and Kirzner, we developed a scale that addresses six areas of innovative activity: new products, new services, new methods of production, opening new markets, new sources of supply, and new ways of organizing. Using factor analysis on data from two separate field studies – 684 firms from eight industries and 200 information technology firms – we found that innovation as newness represents a unidimensional construct, distinguished only by the degree of radicalness.
Integrating creativity and social network theories, I explore the direct and interactive effects of relationship strength, network position, and external ties on individual creative contributions. Results from a study of research scientists suggest that weaker ties are generally beneficial for creativity, whereas stronger ties have neutral effects. I also found that centrality is more positively associated with creativity when individuals have few ties outside of their organization and that the combination of centrality and many outside ties is not optimal. I discuss the implications of these findings for creativity and social network research.
This paper considers the role of design, as the emergent arrangement of concrete details that embodies a new idea, in mediating between innovations and established institutional fields as entrepreneurs attempt to introduce change. Analysis of Thomas Edison's system of electric lighting offers insights into how the grounded details of an innovation's design shape its acceptance and ultimate impact. The notion of robust design is introduced to explain how Edison's design strategy enabled his organization to gain acceptance for an innovation that would ultimately displace the existing institutions of the gas industry. By examining the principles through which design allows entrepreneurs to exploit the established institutions while simultaneously retaining the flexibility to displace them, this analysis highlights the value of robust design strategies in innovation efforts, including the phonograph, the online service provider, and the digital video recorder.
This article outlines the mechanism by which brokerage provides social capital. Opinion and behavior are more homogeneous within than between groups, so people connected across groups are more familiar with alternative ways of thinking and behaving. Brokerage across the structural holes between groups provides a vision of options otherwise unseen, which is the mechanism by which brokerage becomes social capital. I review evidence consistent with the hypothesis, then look at the networks around managers in a large American electronics company. The organization is rife with structural holes, and brokerage has its expected correlates. Compensation, positive performance evaluations, promotions, and good ideas are disproportionately in the hands of people whose networks span structural holes. The between-group brokers are more likely to express ideas, less likely to have ideas dismissed, and more likely to have ideas evaluated as valuable. I close with implications for creativity and structural change.