Skip to main content
SpringerLink
Log in

Flaunt them If you’ve Got them? Informal Connections and Beliefs About Prospects of Upward Mobility in Transition Economies

Comparative Economic Studies volume 65, pages 416–441 (2023)Cite this article

Abstract

Expectations of future upward mobility have been shown to determine current preferences for redistribution, but how are these expectations formed? This study presents evidence that expectations of future mobility may be constrained by beliefs about how fair is access to key opportunities in life, like a good government or private sector job, or university education. Data from the Life in Transition survey show that those who believe informal connections to be vital to access these key opportunities—a widespread belief in the region—have lower expectations of future upward mobility, while access to informal connections is associated with a 40% higher expected future mobility. Finally, those who perceive access to opportunities to be unfair and mediated by informal connections also demand more redistribution, unless such connections are available to secure access to opportunities.

This is a preview of subscription content, access via your institution.

Access options

Buy single article

Instant access to the full article PDF.

USD 39.95

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5
Fig. 6
Fig. 7

Notes

  1. This paper is also related, more generally, to studies that highlight the link between deprivation and under-investment in human capital (Appadurai 2004; Alsop et al. 2006; Hoff and Pandey 2004).

  2. No data are available for Turkmenistan. Mongolia and Turkey are excluded from the analysis given the focus on Transition Economies.

  3. The details of the sampling methodology can be found on the EBRD website at http://www.ebrd.com/downloads/research/surveys/LiTS2eh.

  4. One concern here is the mobility variable refers to the position of the household on the income ladder, whereas the questions about perceived importance, and availability, of connections, are asked of the individual respondent. With respect to beliefs about the importance of connections in society, expressed individually, this is not necessarily problematic, given the phrasing of the survey question, as the beliefs that are being queried are general—“how important is it in our country...”, and not “how important is it for me personally”. Likewise, it is plausible to assume that the availability of connections, while asked at the individual level, provides a reasonable approximation for the availability of such connections to the household at large.

  5. The hypothesis \(\beta _{2}=0\) is more difficult to interpret for the following reason. The responses to perceived importance of connections are on an ordinal scale and the CI=1 group is constructed as a union of “very important” and “essential” (the categories above the middle category). As such, the complementary category CI=0 is a union of “not important at all”, “somewhat important” and “moderately important”. So, the counterpart to the CI=1 category of connections being vital is not “connections being not important at all”, but rather “connections either not being important or only somewhat/moderately important”. In this sense, the availability of connections, which is what is being tested by \(\beta _{2}=0\), can still make a difference to mobility prospects. Because of this ambiguity, restricting the comparisons to the CI=1 group, as done in Hypothesis 1 (b2+ b3=0) is analytically much cleaner and more straightforward to interpret.

References

  • Alesina, A.F., and G.-M. Angeletos. 2005. Fairness and redistribution. The American Economic Review 95 (4): 960–980.

    Article  Google Scholar 

  • Alesina, A. F. , DiTella, R., and MacCulloch P. 2004. Inequality and happiness: Are Europeans and Americans different? Journal of Public Economics, 88 (9-10), 2009-2042.

  • Alesina, A. F. and Giuliano, P. 2009. Preferences for Redistribution. NBER Working Papers 14825, National Bureau of Economic Research, Inc.

  • Alesina, A.F., and E. La Ferrara. 2005. Preferences for redistribution in the land of opportunities. Journal of Public Economics 89 (5–6): 897–931.

    Article  Google Scholar 

  • Alesina, A. F. , Stancheva, S., and Teso, E. 2016. Intergenerational mobility and support for redistribution. NBER Working Paper No. 23027.

  • Alsop, R., Bertelsen, M., and Holland, J. 2006. Empowerment in Practice: From Analysis to Implementation. Directions in Development No. 35032, Washington, DC: The World Bank.

  • Appadurai, A. 2004. The capacity to aspire: Culture and the terms of recognition. In Culture and Public Action, ed. V. Rao and M. Walton, 59–84. Stanford University Press.

    Google Scholar 

  • Benabou, R., and E.A. Ok. 2001. Social mobility and the demand for redistribution: The POUM hypothesis. The Quarterly Journal of Economics 116 (2): 447–487.

    Article  Google Scholar 

  • Benabou, R., and J. Tirole. 2006. Belief in a just world and redistributive politics. The Quarterly Journal of Economics 121 (2): 699–746.

    Article  Google Scholar 

  • Besley, T. 2016. Aspirations and the political economy of inequality. London: Mimeo. London School of Economics.

    Google Scholar 

  • Bourguignon, F., F.H.G. Ferreira, and M. Menendez. 2003. Inequality of outcomes and inequality of opportunities in Brazil. Department of Economics PUC-Rio (Brazil): Tech. rep.

    Book  Google Scholar 

  • Bourguignon, F., F.H.G. Ferreira, and M. Walton. 2006. Equity, efficiency and inequality traps: A research agenda. The Journal of Economic Inequality 5 (2): 235–256.

    Article  Google Scholar 

  • Bozeat, N., P. Irving, X. Ramos, M. Vincze, C. Juravle, and D. Jesuit. 2010. Social Mobility and Intra-Regional Income Distribution Across EU Member States. Tech. rep., European Commission, DG Regional Policy.

  • Bryan, G., Chowdhury, S., and Mobarak, A., 2012. Seasonal Migration and Risk Aversion. Discussion Paper 8739, Centre for Economic Policy Research, London.

  • Case, A., and A. Deaton. 2009. Health and Well-Being in Udaipur and South Africa. In Developments in the Economics of Aging, ed. David Wise, 317–49. Chicago: University of Chicago Press.

    Chapter  Google Scholar 

  • Checchi, D., and A. Filippin. 2004. An Experimental Study of the POUM Hypothesis. Research on Economic Inequality 11: 115–136.

    Article  Google Scholar 

  • Checchi, D., and V. Peragine. 2010. Inequality of opportunity in Italy. Journal of Economic Inequality 8 (4): 429–450.

    Article  Google Scholar 

  • Chetty, R., N. Hendren, and L.E. Katz. 2016. The effects of exposure to better neighborhoods on children: New evidence from the moving to opportunity experiment. American Economic Review 106 (4): 855–902.

    Article  Google Scholar 

  • Cogneau, D., and S. Mesple-Somps. 2008. Inequality of opportunity for income in five countries of Africa. In Research on Economic Inequality, vol. 16, 99–128. Emerald (MCB UP ): Bingley.

  • Cojocaru, A. 2014. Prospects of upward mobility and preferences for redistribution: Evidence from the Life in Transition Survey. European Journal of Political Economy 34: 300–314.

    Article  Google Scholar 

  • Cojocaru, A. 2014. Fairness and inequality tolerance: Evidence from the life in transition survey. Journal of Comparative Economics 42: 590–608.

    Article  Google Scholar 

  • Corak, M., 2017. Divided Landscapes of Economic Opportunity: The Canadian Geography of Intergenerational Income Mobility. Working Papers 2017-043, Human Capital and Economic Opportunity Working Group, University of Chicago, Chicago, IL.

  • Davis, J., and Mazumder, B., 2017. The decline in intergenerational mobility after 1980. Federal Reserve Bank of Chicago Working Paper No. 2017-05.

  • Dinesen, P.T., M. Schaeffer, and K.M. Sonderskov. 2020. Ethnic diversity and social trust: A narrative and meta-analytical review. Annual Review of Political Science 23: 441–465.

    Article  Google Scholar 

  • European Bank for Reconstruction and Development, 2017. Life in Transition: A decade of measuring transition. London.

  • Ferreira, F.H.G., and J. Gignoux. 2008. The measurement of inequality of opportunity : theory and an application to Latin America. The World Bank: Tech. rep.

    Book  Google Scholar 

  • Ferreira, F. H. G., Gignoux, J. and Aran, M.,. 2010. Measuring inequality of opportunity with imperfectdata : the case of Turkey. Tech. rep., The World Bank.

  • Ferreira, F. H. G., Vega, J. R. M., Barros, R. P. D. and Chanduvi, J. S., 2008. Measuring Inequality of Opportunities in Latin America and the Caribbean. World Bank Publications.

  • Genicot, G., and Ray, D., 2017. Aspirations and inequality. Econometrica, Vol. 85, No. 2 (March), 489–519.

  • Ghosal, S., Jana, S., Mani, A., Mitra, S., and Roy, S., 2015. Sex workers, self-image and stigma: Evidence from Kolkata Brothels. CAGE Online Working Paper Series 302, Competitive Advantage in the Global Economy (CAGE).

  • Guyon, N., and E. Huillery. 2016. Aspirations and the perpetuation of social inequalities: Evidence from French teenagers”. Paris School of Economics: Mimeo.

    Google Scholar 

  • Hoff, K. and Pandey, P., 2004. Belief systems and durable inequalities : an experimental investigation of Indian caste. Policy Research Working Paper Series 3351, The World Bank.

  • Hoff, K., 2012. The effect of inequality on aspirations. Background paper for Addressing Inequality in South Asia, edited by M. Rama, T. Beteille, Y. Li, P. Mitra and J. Newman, Washington, DC: The World Bank

  • Jacoby, H., and G. Mansuri. 2012. Crossing boundaries: How social hierarchy impedes economic mobility. Journal of Economic Behavior and Organization 117: 135–154.

    Article  Google Scholar 

  • Kelley, S.M.C., and C.G.E.K. Kelley. 2009. Subjective social mobility: Data from 30 nations. In Charting the Globe: The International Social Survey Programme 1984–2004, 106–24, ed. Max Hallier, Roger Jowell, and Tom W. Smith. London: Routledge.

    Google Scholar 

  • Lefranc, A., N. Pistolesi, and A. Trannoy. 2009. Equality of opportunity and luck: Definitions and testable conditions, with an application to income in France. Journal of Public Economics 93 (11–12): 1189–1207.

    Article  Google Scholar 

  • Narayan, A., R. Van der Weide, A. Cojocaru, C. Lakner, S. Redaeli, D.G. Mahler, R.G.N. Ramasubbaiah, and S. Thewissen. 2018. Fair Progress? Economic Mobility Across Generations Around the World. Equity and Development, Washington, DC: The World Bank.

    Book  Google Scholar 

  • Ooghe, E., and E. Schokkaert. 2007. Equality of opportunity versus equality of opportunity sets. Social Choice and Welfare 28 (2): 209–230.

    Article  Google Scholar 

  • Organisation for Economic Co-operation and Development. 2008. Growing unequal?: income distribution and poverty in OECD countries. Organisation for Economic Co-operation and Development: OECD.

  • Organisation for Economic Co-operation and Development. 2010. Economic Policy Reforms: Going for Growth 2010. Organisation for Economic Co-operation and Development: OECD.

  • Piketty, T. 1995. Social mobility and redistributive politics. The Quarterly Journal of Economics 110 (3): 551–84.

    Article  Google Scholar 

  • Ravallion, M., and M. Lokshin. 2000. Who wants to redistribute?: The tunnel effect in 1990s Russia. Journal of Public Economics 76 (1): 87–104.

    Article  Google Scholar 

  • Rawls, J. 1971. A theory of justice. Cambridge: Belknap Press.

    Book  Google Scholar 

  • Roemer, J.E., R. Aaberge, U. Colombino, J. Fritzell, S.P. Jenkins, A. Lefranc, I. Marx, M. Page, E. Pommer, and J. Ruiz-Castillo. 2003. To what extent do fiscal regimes equalize opportunities for income acquisition among citizens? Journal of Public Economics 87 (3–4): 539–565.

    Article  Google Scholar 

  • Schoon, I., and S. Parsons. 2002. Teenage aspirations for future careers and occupational outcomes. Journal of Vocational Behavior 60: 262–280.

    Article  Google Scholar 

  • Serneels, P. and Dercon, S., 2014. Aspirations, poverty, and education. Young Lives Working Paper No. 125. Oxford Department of International Development, University of Oxford.

  • Weintraub, M. Ritterman, L.C.H., Fernald, N.A., Bertozzi, S., and Syrne, L., 2015. Perceptions of social mobility: Development of a new psychosocial indicator associated with adolescent risk behaviors, Frontiers in Public Health, Vol 3, Article 52.

  • World Bank, 2005. World Development Report 2006: Equity And Development. World Bank Publications, 2006th edn.

Download references

Acknowledgements

The author is grateful to two anonymous reviewers as well as Andrew Clark, Ambar Narayan, Branko Milanovic, Carol Graham, Christoph Lakner, Daniel Gerszon Mahler, Ivan Torre, Madiha Afzal, Maurizio Bussolo, Peter Murrell, Rakesh Gupta N. Ramasubbaiah, Roy Van der Weide, Silvia Redaelli, Stefan Thewissen, and to the participants of the Economic History, Comparative Economics and Policy-making in Transition conference, the Equal Chances: Equality of Opportunity and Social Mobility Around the World conference, and the IBS and World Bank conference on Globalization, Work, and Distributional Tensions in Europe and Central Asia for helpful comments and suggestions, and to the European Bank for Reconstruction and Development (EBRD) for access to the data. All remaining errors are mine alone. The views expressed in this paper are those of the author and should not be attributed to The World Bank Group or any affiliated organization.

Author information

Authors and Affiliations

  1. The World Bank, 1818 H St, NW Washington, DC, 20433, USA

    Alexandru Cojocaru

Authors
  1. Alexandru Cojocaru
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Alexandru Cojocaru.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and Permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Cojocaru, A. Flaunt them If you’ve Got them? Informal Connections and Beliefs About Prospects of Upward Mobility in Transition Economies. Comp Econ Stud 65, 416–441 (2023). https://doi.org/10.1057/s41294-023-00205-x

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/s41294-023-00205-x

Keywords

JEL Classification

search

Navigation