Wage Determination in Social Occupations: The Role of Individual Social Capital

Julie L. Hotchkiss and Anil Rupasingha

Working Paper 2016-12
November 2016

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We make use of predicted social and civic activities (social capital) to account for selection into "social" occupations. Individual selection accounts for more than the total difference in wages observed between social and nonsocial occupations. The role that individual social capital plays in selecting into these occupations and the importance of selection in explaining wage differences across occupations is similar for both men and women. We make use of restricted data from the 2000 decennial census and the 2000 Social Capital Community Benchmark Survey. Individual social capital is instrumented by distance-weighted surrounding census tract characteristics.

JEL classification: J31, J24, C34

Key words: social capital, wage differentials, occupational choice, switching regression, nonpublic data, factor analysis


The authors appreciate comments from and discussions with Melissa R. Banzhaf, Tim Dunne, Barry Hirsch, Lisa Kahn, Tom Mroz, M. Melinda Pitts, and Matthew Ross. Research assistance from Augustine Denteh, Tom Zichong Qu, and Kalee Burns is also appreciated. Any opinions and conclusions expressed herein are those of the authors' and do not necessarily represent the views of the U.S. Census Bureau, the Federal Reserve Bank of Atlanta, the Federal Reserve System, the U.S. Department of Agriculture, or the Economic Research Service. All results have been reviewed to ensure that no confidential information is disclosed. Any remaining errors are the authors' responsibility.
Please address questions regarding content to Julie L. Hotchkiss (corresponding author), Federal Reserve Bank of Atlanta and Georgia State University, Research Department, 1000 Peachtree Street NE, Atlanta, GA 30303, 404-498-8198, julie.l.hotchkiss@atl.frb.org or Anil Rupasingha, U.S. Department of Agriculture, Economic Research Service, 1400 Independence Avenue SW, MS 1800, Washington, DC 20024, 202-694-5227, anil.rupasingha@ers.usda.gov.
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