Social networks and labour productivity in Europe: an empirical investigation

  • C. Di Guilmi
  • F. Clementi
  • T. Di Matteo
  • M. Gallegati
Regular Article

Abstract

This paper uses firm-level data recorded in the Amadeus database to investigate the distribution of labour productivity in different European countries. We find that the upper tail of the empirical productivity distributions follows a decaying power-law, whose exponent α is obtained by a semi-parametric estimation technique recently developed by Clementi et al. [Physica A 370(1):49–53, 2006]. The emergence of “fat tails” in productivity distribution has already been detected in Di Matteo et al. [Eur Phys J B 47(3):459–466, 2005] and explained by means of a model of social network. Here we show that this model is tested on a broader sample of countries having different patterns of social network structure. These different social attitudes, measured using a social capital indicator, reflect in the power-law exponent estimates, verifying in this way the existence of linkages among firms’ productivity performance and social network.

Keywords

Labour productivity Power-law distribution Semi-parametric bootstrap approach Social networks Social capital 

JEL Classification

A13 C14 J24 

References

  1. Ahuja G (2000) Collaboration networks, structural holes, and innovation: a longitudinal study. Adm Sci Q 45(3): 425–455CrossRefGoogle Scholar
  2. Albert R, Barabási AL (2002) Statistical mechanics of complex networks. Rev Mod Phys 74(1): 47–97CrossRefGoogle Scholar
  3. Andrews DWK, Buchinsky M (2000) A three-step mehod for choosing the number of bootstrap repetitions. Econometrica 68(1): 23–51CrossRefGoogle Scholar
  4. Bourdieu P (1996) The state nobility: elite schools in the field of power. Polity Press, CambridgeGoogle Scholar
  5. Burt RS (2000) The network structure of social capital. In: Sutton RI, Staw BM(eds) Research in organizational behavior. Elsevier Science JAI, Amsterdam, London, pp 345–423Google Scholar
  6. Clementi F, Di Matteo T, Gallegati M (2006) The power-law tail exponent of income distributions. Physica A 370(1): 49–53CrossRefGoogle Scholar
  7. Cohen D, Prusak L (2001) In good company: how social capital makes organizations work. Harvard Business School Press, BostonGoogle Scholar
  8. Coleman JS (1988) Social capital in the creation of human capital. Am J Sociol 94(Supplement): S95–S120CrossRefGoogle Scholar
  9. Coleman JS (1990) Foundations of social theory. Harvard University Press, CambridgeGoogle Scholar
  10. Cooper RW (1999) Coordination games: complementarities and macroeconomics. Cambridge University Press, CambridgeGoogle Scholar
  11. Di Giacinto V, Nuzzo G (2006) Explaining labour productivity differentials across Italian regions: the role of socio-economic structure and factor endowments. Pap Reg Sci 85(2): 299–320CrossRefGoogle Scholar
  12. Di Matteo T, Aste T, Hyde ST (2004) Exchanges in complex networks: income and wealth distributions. In: Mallamace F, Stanley HE (eds) The Physics of complex systems (new advances and perspectives). IOS Press, Amsterdam, pp 435–442Google Scholar
  13. Di Matteo T, Aste T, Gallegati M (2005) Innovation flow through social networks: productivity distribution in France and Italy. Eur Phys J B 47(3): 459–466CrossRefGoogle Scholar
  14. DuMouchel WH (1983) Estimating the stable index α in order to measure tail thickness: a critique. Ann Stat 11(4): 1019–1031Google Scholar
  15. Fukuyama F (2000) Social capital and civil society. IMF Working Paper 00/74. http://ssrn.com/abstract=879582
  16. Granovetter M (1985) Economic action and social structure: the problem of embeddedness. Am J Sociol 91: 481–510CrossRefGoogle Scholar
  17. Granovetter M (2005) The impact of social structure on economic outcomes. J Econ Perspect 19(1): 33–50CrossRefGoogle Scholar
  18. Guiso L, Sapienza P, Zingales L (2004) The role of social capital in financial development. Am Econ Rev 94(3): 526–556CrossRefGoogle Scholar
  19. Hall P, Welsh AH (1985) Adaptive estimates of parameters of regular variation. Ann Stat 13(1): 331–341CrossRefGoogle Scholar
  20. Hill BM (1975) A simple general approach to inference about the tail of a distribution. Ann Stat 3(5): 1163–1174CrossRefGoogle Scholar
  21. Knack S, Keefer P (1997) Does social capital have an economic payoff? A cross-country investigation. Q J Econ 112(4): 1251–1288CrossRefGoogle Scholar
  22. Lux T (1996) The stable Paretian hypothesis and the frequency of large returns: an examination of major German stocks. Appl Financ Econ 6(6): 463–475CrossRefGoogle Scholar
  23. Motohashi K (2007) Firm-level analysis of information network use and productivity in Japan. J Jpn Int Econ 21(1): 121–137CrossRefGoogle Scholar
  24. Nolan JP (1997) Numerical calculation of stable densities and distribution functions. Comm Stat Stoch Models 13(4): 759–774CrossRefGoogle Scholar
  25. Nolan JP (1999a) An algorithm for evaluating stable densities in Zolotarev’s (M) parameterization. Math Comput Model 29(10): 229–233CrossRefGoogle Scholar
  26. Nolan JP (1999b) Fitting data and assessing goodness-of-fit with stable distributions. In: Nolan JP, Swami A(eds) Proceedings of the ASA-IMS conference on applications of heavy tailed distributions in economics, engineering and statistics. American University, Washington DCGoogle Scholar
  27. Nolan JP (2001) Maximum likelihood estimation of stable parameters. In: Mikosch T, Resnick SI (eds) Lévy processes: theory and applications. Birkhäuser, Boston, pp 379–400Google Scholar
  28. Pammolli F, Riccaboni M (2001) Technological regimes and the growth of networks: an empirical analysis. LEM Working Paper Series 2001/07, Sant’Anna School of Advanced Studies of Pisa. http://www.lem.sssup.it/WPLem/files/2001-07.pdf
  29. Pittaway L, Robertson M, Munir K, Denyer D, Neely A (2004) Networking and innovation: a systematic review of the evidence. Int J Manag Rev 5–6(3–4): 137–168CrossRefGoogle Scholar
  30. Portes A (1998) Social capital: its origins and applications in modern sociology. Annu Rev Sociol 24(1): 1–24CrossRefGoogle Scholar
  31. Putnam RD (1995) Tuning in, tuning out: the strange disappearance of social capital in America. PS-Polit Sci Polit 28(4): 664–683CrossRefGoogle Scholar
  32. Putnam RD (2000) Bowling alone: the collapse and revival of American community. Simon & Schuster, New YorkGoogle Scholar
  33. Rogers EM (2003) Diffusion of innovation, 5th edn. Free Press, New YorkGoogle Scholar
  34. Rosenfeld MTW, Franz P, Gunther J, Heimpold G, Kawka R, Kronthaler F, Barkholz M (2004) Innovative kompetenzfelder, produktionsnetzwerke und branchenschwerpunkte der ostdeutschen wirtschaft. Endbericht, a study at the Institute für Wirtschaftsforschung Halle, IWHGoogle Scholar
  35. Sabatini F (2006) Does social capital improve labour productivity in small and medium enterprises? Working Paper 92, University “La Sapienza” of Rome. http://dep.eco.uniroma1.it/docs/working_papers/Wp92.pdf
  36. Solow RM (1995) Trust: the social virtues and the creation of prosperity (book review). New Repub 213(5): 36–40Google Scholar
  37. Uhlig H (2006) Regional labor markets, network externalities and migration: the case of German reunification. Am Econ Rev 96(2): 383–387CrossRefGoogle Scholar
  38. Vecernik J (2003) Skating on thin ice: a comparison of work values and job satisfaction in CEE and EU countries. Int J Comp Sociol 44(5): 444–471CrossRefGoogle Scholar

Copyright information

© Springer-Verlag 2008

Authors and Affiliations

  • C. Di Guilmi
    • 1
    • 2
  • F. Clementi
    • 1
    • 2
  • T. Di Matteo
    • 2
  • M. Gallegati
    • 1
  1. 1.Department of EconomicsPolytechnic University of MarcheAnconaItaly
  2. 2.Applied Mathematics, Research School of Physical Sciences and EngineeringThe Australian National UniversityCanberraAustralia

Personalised recommendations