Social capital across different residential communities in china

SOCIAL CAPITAL ACROSS DIFFERENT RESIDENTIAL COMMUNITIES IN CHINA YUAN XU NATIONAL UNIVERSITY OF SINGAPORE 2011 SOCIAL CAPITAL ACROSS DIFFERENT RESIDENTIAL COMMUNITIES IN CHINA YUAN XU (B.M.), Central University of Finance and Economics A THESIS SUBMITTED FOR THE DEGREE OF MASTER OF SCIENCE (REAL ESTATE AND URBAN ECONOMICS) DEPARTMENT OF REAL ESTATE SCHOOL OF DESIGN AND ENVIRONMENT NATIONAL UNIVERSITY OF SINGAPORE 2011 Acknowledgement This thesis could not have been finished without the help of a number of people Particularly, I would like to take this opportunity to express my sincere thanks to the following: Firstly, I would like to express my sincere thanks to my supervisor, Professor Fu Yuming, Vice Dean of the School of Design and Environment, National University of Singapore Professor Fu has generously spent time on guiding me, from choosing modules, to finding a research topic, to conducting empirical analysis, to writing my thesis, to improving my presentation skills His encouragement and patient guidance have not only helped me finish my master study, but also changed my attitude towards work and life in the future Due to the supervision of Professor Fu, I believe I have improved a great deal as a researcher and as an individual Secondly, I would like to thank Professor Tu Yong and Professor Ong Seow Eng The modules of Research Methodology in Real Estate and Real Estate Economics Seminar taught by Professor Tu, and the module of Research Topics in Real Estate jointly given by Professors Tu and Ong have equipped me with a solid foundation of doing research i Thirdly, I want to thank Ms Zainab Binte Abdul Ghani and Ms Nor‟Aini Binte Ali for patiently offering me with a lot of help in relation to the administrative matters I encountered in my master study at the National University of Singapore Fourthly, I want to thank the two anonymous examiners for providing valuable suggestions of improving my thesis I have benefited a lot from the constructive advice I also wanted to say a “thank you” to my seniors and friends; especially Li Pei, Liang Lanfeng, Xu Yiqin, Wang Yourong, Guo Yan, Zhang Liang, Li Qing, and Zhao Yibo among others, who have offered valuable direct and indirect suggestions for my study and research, and have offered me a lot of help in my life in Singapore Last but not least, I want to thank my family members, especially my parents and my little sister I thank my parents for supporting my education for so many years and my choice of studying at the National University of Singapore, and I thank my sister for being a very good daughter at home and for providing company to my parents while I am away Thank you all! ii Table of Contents Acknowledgement i Table of Contents iii Summary v List of Tables viii List of Appendices x Introduction 1.1 Research Motivation 1.2 Thesis Organization Literature Review 2.1 Review on Social Capital Literature 2.2 Review of Social Interactions Literature 13 2.3 Chinese Literature Review 16 Institutional Background 19 3.1 The Chinese Culture 19 3.2 Formation of Different Residential Community Types 20 3.3 The Hukou System in China 24 iii Methodology 26 Data 29 5.1 Description of the Data Set and Variables 29 5.2 Descriptive Statistics of Key Variables 35 Empirical Result 40 6.1 Separation of Private Effects and Social Influence 40 6.2 Determinants of Social Influence 45 Conclusion 59 7.1 Main Findings and Policy Implications 59 7.2 Limitations of This Study and Suggestions for Further Research 61 References 64 Appendices 73 iv Summary Social Capital is an intangible asset residing in social relations, which could help improve the welfare of an individual and the group the individual belongs to At the individual level, it can be manifested in one‟s social network, trustworthiness, social status, and so on; at the group level, it is embodied by social norms, trust, etc., which facilitate cooperation, social cohesion and civic engagement and therefore help improve social and economic outcomes In academic research, social capital has been viewed as partly a private good, as it could be built up by investment; in the meantime, it may also be viewed as a public good, as it produces external benefits through social influences Moreover, social capital has been widely recognized as an important factor facilitating collective actions and social economic development as well as promoting individual success and well-being (e.g Glaeser, Laibson, and Sacerdote,2002; Durlauf and Fafchamps, 2005; Helliwell and Wang, 2010) A residential community or neighborhood is a place where individuals may spend most of their spare time, and therefore, the social capital within a residential community is likely to be an important concern of improving residents‟ wellbeing Although the location-specific nature of social capital in a residential context has been closely examined in developed economies v like the US, little research has been conducted in China, the largest emerging economy of oriental culture Using the China General Social Survey 2005 (CGSS 2005) and other sources of data, this study attempts to examine how individual characteristics and location attributes influence individual social capital, measured by four indicators the extent to which individuals are acquainted with (ACQUAINT) and trust their neighbors (TRUST), and to which they are interested and involved in community affairs (INVOLVE), and the frequency at which they exchange help with their neighbors (HELP) Among these four social capital indicators, ACQUAINT and TRUST represent individual‟s perception of their social capital within the residential community, while INVOLVE and HELP could be viewed as their action of investing in local social capital After reviewing relevant theories, the empirical part is composed of two stages: (i) the decomposition of the variation in social capital indicators into individual effects and social influences (the community fixed effects); (ii) determinants of the social influences Empirical results for the first stage show that individuals‟ perceptions of their neighbors‟ trustworthiness are the most difficult to explain; getting older, becoming a Communist party member and a homeowner seem to improve all of the four social capital vi indicators of ACQUAINT, TRUST, HELP and INVOLVE Variance decomposition after the first stage analysis shows that the variation is overwhelmingly due to differential social influences, as opposed to differential individual attributes Analysis of the community fixed effects of ACQUAINT, TRUST, HELP and INVOLVE reveals more positive social influences in rural communities, including rural villages and towns and “urban villages” At the city level, local social capital is higher for communities located in cities with a lower average annual disposable income and better climate, measured by higher temperature index and lower humidity Conclusions obtained from this study highlight the need for policy attention to manage the potential decline in social capital, with rising affluence and income inequality in Chinese cities, at a time when social capital is much in need for building new urban communities Measures should be taken to encourage social interactions in residential neighborhoods that promote social capital Moreover, the importance of urban attributes in influencing social capital shows the need for more research in the future to improve our understanding of the role of the urban environment in social capital formation vii List of Tables TABLE i Description of Individual Variables from CGSS2005 (9406 Observations) 31 TABLE ii Correlation Matrix of Individual Variables (9406 Observations) 32 TABLE iii Description of Community Variables from CGSS2005(348 Observations) 33 TABLE iv Correlation Matrix of Community Variables from CGSS2005(348 Observations) 33 TABLE v Description of Urban Variables [number in the brackets indicates source] (49 to 54 observations) 34 TABLE vi Descriptive Statistics of Key Variables 36 TABLE vii Separation of Private Effects and Fixed Effects 44 TABLE viii Variance Decomposition 45 TABLE ix Mean and Standard Deviation of Social Influences and Community Average Individual Effect 47 TABLE x Correlation Matrix of Social Influences 48 TABLE xi Variation of Local Social Capital across Different Residential Community Types 49 viii Chapter 7: Conclusion As each community usually has around 1,000 households, the households surveyed might not be sufficiently representative What‟s more, information of residential community type is judged by the interviewers, and it is not provided by the interviewees Under some circumstances, the information of residential community type might not be correct, especially when there are mixed communities Secondly, this study could not perfectly control the self-selection problem It is likely that certain or some characteristics of the community have attracted residents, such as ideal location close to a good school, close to the CBD of the city, and so on But this information is not available in the database What could be done is to control as many community attributes as possible and also control city level attributes Thirdly, the first stage estimation of this paper uses the ordered probit estimation with fixed effects, which suffers from the incidental parameter problem Although it has been argued that the coefficients obtained from the probit model with fixed effects are biased due to the incidental parameter problem (Neyman and Scott, 1948; Greene, 1999), yet the alternative of using the random effects model has the problem of requiring strong assumptions about heterogeneity Also, studies have found that the estimated index coefficient is proportional to the true index coefficient (Fernández-Val, 62 Chapter 7: Conclusion 2009) As the index coefficients of the location dummies obtained from the first stage regression are going to be used in the same function in the second stage estimations, the incidental parameter problem would have limited influence on the second stage estimation Given the limitations of this study, there may also be some extensions A more complete and accurate database should be constructed for further study The database should include accurate community type information; length of residence, education quality of nearby schools, accurate annual household income and expenses, and so on In addition, other topics like the endogenous effects and contextual effects on property prices, children‟s academic performance, etc might also be interesting Moreover, the variance decomposition after the first stage estimation result also shows the importance of the location fixed effects, which point to the research direction of providing theories and empirical evidence related to the location fixed effects in the future 63 References References Agarval, S., B.W.Ambrose, S Chomsisengphet, A.B Sanders, (2009), “Thy Neighbor's Mortgage: Does Living in a Subprime Neighborhood Impact Your Probability of Default?” Working Paper Akerlof, G (1980), “A Theory of Social Custom, of Which Unemployment may be One Consequence,” Quarterly Journal of Economics, 94, pp 749-75 Bemheim, D., (1994), “A Theory of Conformity,” Journal of Political Economy, 102, 841-77 Berliant, M., R R Reed Ⅲ, P Wang (2006), “Knowledge Exchange, Matching, and Agglomeration,” Journal of Urban Economics, 60, 69-95 Bian, Y.J., (2004), “Sources and Functions of Urbanites‟ Social Capital: a Network Approach”, Social Science in China, 3, 136-146 Bian, Y.J and H.X Qiu, (2000), “The Social Capital of Enterprises and Its Efficiency”, China Social Science, 2, 87-99 Bian, Y.J and W.H Zhang, (2001), “Economic Structure, Social Network and Employment Mobility”, Social Science in China, 2, 77-91 64 References Brock, W and S Durlauf, (2001a), “Discrete Choice with Social Interactions,” Review of Economic Studies, 68(2), 235-60 Brock, W and S Durlauf, (2001b), “Interactions-Based Models,” Handbook of Econometrics, 5, 3297-3380 Brueckner, J.K and A.G Largey, (2008), “Social Interaction and Urban Sprawl,” Journal of Urban Economics, 64(1), 18-34 Charles, K K and P Kline, (2006), “Relational Costs and the Production of Social Capital: Evidence from Carpooling,” Economic Journal, 116, 581-604 Chen, W.C and X.X Wang, (2004), “Estimating the Influence of Human Capital and Social Capital on Migrants‟ Employment—A Case Study of Changsha”, Academia Bimestris, 6, 70-76 Chen, Y.W., J.G Zheng, and C.H Wu, (2005), “Factors Analysis of the Graduates‟ Initial Job Searching Time—Empirical Data from Some Shanghai Universities”, Tsinghua Journal of Education, 26(2), 27-34 Coleman, J C., (1988), “Social Capital in the Creation of Human Capital”, American Journal of Sociology, 94, 95-120 Conlisk, J (1980), "Costly Optimizers versus Cheap Imitators." 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also, social capital influences human capital and indirectly affects the political, institutional and legal arrangements For example, individuals‟ income and years of schooling are usually associated with individuals‟ social capital; on the other hand, individuals‟ social capital could affect income, e.g through providing more business opportunities or information, and individuals‟ social capital could affect education outcomes via peer effects, for example, “Mencius‟ Mother, Three Moves” Political and institutional arrangements affect individual social capital accumulation by affecting the social environment the individual is living in In addition, social capital could also affect political and institutional arrangements through its effect on the human capital Therefore, social capital is very important for our human well-being, economic well-being and GDP growth 74 Appendices APPENDIX ii Sample Selection Procedure of CGSS2005 CGSS2005 surveyed 29 provinces in mainland China, including 10,372 households The sample selection involves four levels: (1) Primary Sampling Units (PSU) which are county-level administration units; (2) Secondary Sampling Units (SSU), which are town- or street-level administration units; (3) Tertiary Sampling Units (TSU), which are village- or Juweihui-level administration units; (4) households Before selecting PSU, the province-level administrative districts are classified into five sampling frames: the first frame includes Beijing, Tianjin and Shanghai; the second frame includes the capital cities of the remaining provinces; the third frame includes PSUs in eastern provinces, except for their capital cities; the fourth frame includes PSUs in middle provinces except for their capital cities; the fifth frame includes PSUs in western provinces except for their capital cities In the first sample frame, 15 PSUs are selected, five PSUs in each; in the second frame, 16 PSUs are selected, including six from capital cities of middle provinces, and five from capital cities from eastern and western provinces respectively; in the third frame, 30 PSUs are selected; in the fourth frame, 42 PSUs are selected; in the fifth frame, 22 PSUs are selected As CGSS2005 covers both rural and urban areas, in each PSU the allocation of four SSUs among rural and urban areas are made based on the urbanization 75 Appendices rate After that, two TSUs are randomly selected from each SSU, and 10 households are randomly selected from each TSU 76 ... social capital, and that individual social capital could benefit individuals in improving trust, reinforcing reciprocity, building reputation and increasing the quality and quantity of relevant information... time, social capital would have an important role in shaping the healthy social development in the emerging and transitioning residential neighborhoods in Chinese cities The strengthening or... suggest that possessing hukou and becoming a homeowner increase individuals‟ investment in social capital TRUST is the most difficult to explain among the four social capital indicators Variance