Inequality and Network Structure

This paper explores the manner in which the structure of a social network constrains the level of inequality that can be sustained among its members. We assume that any distribution of value across the network must be stable with respect to coalitional deviations, and that players can form a deviating coalition only if they constitute a clique in the network. We show that if the network is bipartite, there is a unique stable payoff distribution that is maximally unequal in that it does not Lorenz dominate any other stable distribution. We obtain a complete ordering of the class of bipartite networks and show that those with larger maximum independent sets can sustain greater levels of inequality. The intuition behind this result is that networks with larger maximum independent sets are more sparse and hence offer fewer opportunities for coalitional deviations. We also demonstrate that standard centrality measures do not consistently predict inequality. We extend our framework by allowing a group of players to deviate if they are all within distance k of each other, and show that the ranking of networks by the extent of extremal inequality is not invariant in k.inequality;networks;coalitional deviations;power;centrality

A Social Network Analysis of Occupational Segregation

We develop a social network model of occupational segregation between different social groups, generated by the existence of positive inbreeding bias among individuals from the same group. If network referrals are important for job search, then expected homophily in the contact network structure induces different career choices for individuals from different social groups. This further translates into stable occupational segregation equilibria in the labor market. We derive the conditions for wage and unemployment inequality in the segregation equilibria and characterize first and second best social welfare optima. Surprisingly, we find that socially optimal policies involve segregation.Social Networks, Homophily, Inbreeding Bias, Occupational Segregation, Labor Market Inequality, Social Welfare

A Social Network Analysis of Occupational Segregation

We develop a social network model of occupational segregation between different social groups, generated by the existence of positive inbreeding bias among individuals from the same group. If network referrals are important in getting a job, then expected inbreeding bias in the contact network structure induces different career choices for individuals from different social groups. This further translates into stable occupational segregation equilibria in the labour market. We derive the conditions for persistent wage and unemployment inequality in the segregation equilibria. Our framework is proposed as complementary to existing theories used to explain labour market inequalities between groups divided by race, ethnicity or genderSocial Networks; Inbreeding Bias; Occupational Segregation; Labour Market Inequality

Competition Policy in Network Industries: An Introduction

The author discusses issues of the application of antitrust law and regulatory rules to network industries. In assessing the application of antitrust in network industries, we analyze a number of relevant features of network industries and the way in which antitrust law and regulatory rules can affect them. These relevant features include (among others) network effects, market structure, market share and profits inequality, choice of technical standards, relationship between the number of active firms and social benefits, existence of market power, leveraging of market power in complementary markets, and innovation races. The author finds that there are often significant differences on the effects of application of antitrust law in network and non-network industries.

The emergence of inequality in social groups: network structure and institutions affect the distribution of earnings in cooperation games

From small communities to entire nations and society at large, inequality in wealth, social status, and power is one of the most pervasive and tenacious features of the social world. What causes inequality to emerge and persist? In this study, we investigate how the structure and rules of our interactions can increase inequality in social groups. Specifically, we look into the effects of four structural conditions—network structure, network fluidity, reputation tracking, and punishment institutions—on the distribution of earnings in network cooperation games. We analyze 33 experiments comprising 96 experimental conditions altogether. We find that there is more inequality in clustered networks compared to random networks, in fixed networks compared to randomly rewired and strategically updated networks, and in groups with punishment institutions compared to groups without. Secondary analyses suggest that the reasons inequality emerges under these conditions may have to do with the fact that fixed networks allow exploitation of the poor by the wealthy and clustered networks foster segregation between the poor and the wealthy, while the burden of costly punishment falls onto the poor, leaving them poorer. Surprisingly, we do not find evidence that inequality is affected by reputation in a systematic way but this could be because reputation needs to play out in a particular network environment in order to have an effect. Overall, our findings suggest possible strategies and interventions to decrease inequality and mitigate its negative impact, particularly in the context of mid- and large-sized organizations and online communities

Competition Policy In Network Industries: An Introduction

We discuss issues of the application of antitrust law and regulatory rules to network industries. In assessing the application of antitrust in network industries, we analyze a number of relevant features of network industries and the way in which antitrust law and regulatory rules can affect them. These relevant features include (among others) network effects, market structure, market share and profits inequality, choice of technical standards, relationship between the number of active firms and social benefits, existence of market power, leveraging of market power in complementary markets, and innovation races. We find that there are often significant differences on the effects of application of antitrust law in network and non-network industries.networks, network effects, public policy, antitrust, telecommunications, technical standards

Village Economies and the Structure of Extended Family Networks

This paper documents how the structure of extended family networks in rural Mexico relates to the poverty and inequality of the village of residence. Using the Hispanic naming convention, we construct within-village extended family networks in 504 poor rural villages. Family networks are larger (both in the number of members and as a share of the village population) and out-migration is lower the poorer and the less unequal the village of residence. Our results are consistent with the extended family being a source of informal insurance to its members.extended family network, migration, village inequality, village marginality