WPS6804


Policy Research Working Paper                      6804




      Pathways from Jobs to Social Cohesion
                             Frank-Borge Wietzke




The World Bank
Development Economics Vice Presidency
Partnerships, Capacity Building Unit
March 2014
Policy Research Working Paper 6804


  Abstract
  There is growing recognition that access to good jobs is                           indicate that formal employment is associated with a
  an important driver of social cohesion. While economic                             range of social outcomes and behaviors that are typically
  dimensions of labor market outcomes are relatively                                 associated with higher levels of social cohesion. However,
  well documented, evidence on the link between social                               there are also indications that this relationship varies
  cohesion and jobs is still surprisingly scarce. This paper,                        across dimensions of social wellbeing. In particular social
  based on an earlier background report for the WDR                                  interactions and political activism among those in regular
  2013, presents empirical evidence for pathways between                             employment can either improve the quality of aggregate
  labor market outcomes and social cohesion. The findings                            institutions or deepen existing social divides




  This paper is a product of the Partnerships, Capacity Building Unit, Development Economics Vice Presidency. It is part
  of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy
  discussions around the world. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org.
  The author may be contacted at f.b.wietzke@lse.ac.uk.




          The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development
          issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the
          names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those
          of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and
          its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.


                                                        Produced by the Research Support Team
         PATHWAYS FROM JOBS TO SOCIAL COHESION


                                   Frank-Borge Wietzke*




JEL Codes I31, J01, 015

Keywords: labor markets, social cohesion, subjective wellbeing



    Acknowledgements: A previous version of this paper was prepared as a background
   document for the 2013 World Development Report. Earlier drafts of the paper received
thoughtful comments and suggestions from Ambar Narayan, Jesko Hentschel, Dena Ringold,
 Kathleen Beegle, Emmanuel Jimenez and three anonymous reviewers. I am also grateful for
                       research assistance from Catriona McLeod.



* London School of Economics, Department of International Development, Houghton Street, WC2A 2AE, UK.
Email: f.b.wietzke@lse.ac.uk



                                                                                                    1
    I.       Introduction

         There is growing recognition that access to good jobs is an important driver of social
cohesion. The World Bank’s 2013 World Development Report on Jobs discusses the link
between jobs and social cohesion as one of the three central pillars of its multidimensional
framework, in addition to living standards and productivity (World Bank 2013, henceforth
WDR). In a similar vein, the OECD, in its recent flagship report on social cohesion, argues
that labor market outcomes are critical determinants of social stability, both because they
influence the level and distribution of labor earnings and because jobs are critical loci of
social interaction (OECD 2011: 154).

         While economic dimensions of labor market outcomes are relatively well
documented, evidence on the connection between jobs and social cohesion is still surprisingly
scarce. Sociologists have traditionally discussed social cohesion as a wider concept, related
to, but in no way limited to class and status divides grounded in occupational categories
(Norton and de Haan 2012). Recent research on social cohesion by economists has also
focused on wider societal outcomes – like levels of trust, civic attitudes or the quality of
political institutions (see Knack and Keefer 1997, 1995, Easterly et al. 2006, Easterly and
Levine 1997, Rodrik 1999). However, few of these studies have analyzed specifically how
behaviors and interactions that relate to social cohesion vary along with people’s employment
situation.

         This paper, based on an earlier background report for the WDR 2013 on Jobs
(Wietzke and McLeod 2012), seeks to fill the gap by discussing possible pathways between
jobs and social cohesion. Following the WDR and the OECD recent report on the subject I
distinguish between a narrower and a broader definition of social cohesion. The narrower
definition focuses on the capacity of societies and groups to peacefully manage possible
collective action problems (WDR 127ff, Woolcock 2011). This involves a concern with
subjective outcomes like trust and wellbeing, as well as with ‘bridging’ professional relations
that enable individuals and groups to communicate and collaborate across potentially divisive
social and ethnic lines. The wider definition includes notions of social inclusion and mobility
(OECD 2011, Club de Madrid 2009). This addresses concerns about social and political
institutions that limit equal participation in the labor market (Silver 1994, Hills et al. 2007).
The two definitions are linked because a fair distribution of social and economic
opportunities is often identified as a primary source of peaceful relations between relevant
social groups in modern capitalist societies (see for example de Barros et al. 2009, Collier et
al. 2003).

       The paper integrates recent cross-disciplinary literature on these different dimensions
of social cohesion in three steps. After a brief review of earlier writing on labor markets and
social cohesion, I first discuss social barriers that limit access to and mobility within the labor
market. Following the long tradition of sociological and economic research on the subject I
focus on obstacles to mobility that are related to class and social background, as well as on
group-level and neighborhood interactions that are often linked to experiences of social
exclusion and the breakdown of peaceful group relations.

       In the next step I discuss the potentially transformative functions of jobs. The WDR
and the OECD’s report on social cohesion both note that jobs can contribute to social
cohesion by generating social relationships and identities across potentially divisive social
and ethnic boundaries (WDR 126ff, OECD 2011: 154). This is because the work place and
markets often offer opportunities for social interactions that extend beyond narrower
voluntary contacts in people’s neighborhoods or civic associations (Kilroy 2012, Mutz and
Mondak 2006). Jobs can also contribute to important non-monetary dimensions of social
development now targeted by policy makers, such as life satisfaction or social and
institutional spills overs (OECD 2011: 155ff, WDR 85f). I focus on differences in life
satisfaction across individuals of different employment status, as well as on possible
wellbeing spill overs that reduce differences between groups with uneven attachment to the
labor market.

       The last step discusses possible political threats to social cohesion. Political scientists
and economists have traditionally been concerned that collective action problems and
resulting lower levels of political organization among the unemployed may lead to very deep
political divides across groups in the labor market (see for instance Lindbeck and Snower
2002, Olson 1982). These differences can be exacerbated, if groups with better attachment to
the labor market use their superior social and political contacts to promote policies of worker
protection over costlier employment policies that facilitate entry of outsiders into the labor
markets (King and Rueda 2008, Rueda 2005, 2006). From a social cohesion perspective the
primary challenge for policy makers is to implement policies that protect the interests even of
groups who are less vocal in the political arena. Only integrated policies that address directly



                                                                                                 3
the root causes of uneven skills distribution and mobility prospects are likely to reap the full
benefits from the potential transformative functions of jobs.

       The review produces relatively convincing evidence for many of the postulated
pathways between social cohesion and labor markets. For instance, research on
intergenerational mobility suggests that parents’ occupational background is of decreasing
importance as a determinant of economic opportunity (even though there are contrasting
results for other dimensions of family background like education or income). Likewise,
ethnographic and survey research on work-related interactions provides strong illustrative
examples that shared interests and interactions in the work place can help bridge social
divides. However, evidence is much more limited when it comes to demonstrating that these
separate effects link up to producing more cohesive societies at an aggregate level. Typically,
the transitions from individual work-related experiences to the quality of aggregate social
relations are mediated by a multitude of wider social and economic influences. These results
suggest that, from a social cohesion perspective, individual work-related experiences are
probably best studied in conjunction with aggregate social wellbeing outcomes and
institutions. Purely micro-level analysis, based on individual wellbeing effects of jobs alone,
may overlook aggregate outcomes and interactions that are crucial for understanding why
some societies manage to maintain high levels of social cohesion and others not.

       A related lesson is the relatively tentative nature of much of the evidence on the
outcomes of social relations around jobs. Research on economic consequences of jobs
traditionally has to struggle with well-known selection problems, as better skilled or more
motivated people may select into better jobs. These problems are typically magnified in the
analysis of social interactions and network effects that tend to dominate the recent debate
literature on jobs and social cohesion. To this point relatively few studies have been able to
deal conclusively with these endogeneity issues. The review therefore concludes on a
cautiously optimistic note: while there are strong indications that jobs can have the postulated
positive consequences for social cohesion, typically more careful analysis is required to
substantiate these claims with robust evidence.




                                                                                              4
   II.      Earlier debates on labor markets and social cohesion

         Previous scholarship has taken multiple approaches to the interaction between social
cohesion and labor markets. First, what I will call the ‘social atomization’ view in sociology,
has focused on processes of labor market stratification and social segregation that undermine
individual opportunities and mobility experiences. This view highlights the potentially
divisive consequences of increased professional specialization and the division of labor.
Other contributions emphasize potentially positive consequences of work-related interactions
and identities. This includes the type of ‘bridging social relationships now emphasized in
policy debates on social cohesion and jobs, as well as political and institutional solutions for
conflict resolution often linked to more inclusive labor market and social protection policies.

         Sociological research of work-relations has traditionally been dominated by the social
atomization view. Marx famously predicted that workers who are solely in command of their
labor would inevitably rise to secure a larger share of the economic surplus. Marx’s ideas of
societies that are divided between economically-determined classes still play an important
role in the work of some contemporary analysts of capitalist relations and politics (see for
instance Wright 1979, 1997). Durkheim and Weber, often considered as the founders of
‘modern sociology’, also struggled with the question how functionally integrated societies
could maintain their internal coherence through the capitalist transformation. Weber in
particular noted that the rise of capitalist relations would undermine traditional socio-political
orders, replacing them with new orders of social stratification and rational-legalistic systems
of bureaucratic rule (for an overview of classical sociological literature see Norton and de
Haan 2012).

         More recent sociological work has elaborated the atomization argument against the
background of increased international economic integration and rising wage inequalities
(Norton and De Haan 2012). A large literature on ‘social exclusion’ in Europe argued that
macro-economic transformations, such as slowing economic growth and a shift out of manual
work would diminish economic opportunities of lower-skilled workers and undermine formal
and informal systems of solidarity (Alphonse et al. 2008, Byrne 1998, Castells 1996, Hills et
al. [eds.] 2002, Paugam 1996, Silver 1994). In the US and Latin America similar arguments
have been made in the context of growing trends to residential and racial segregation around
deprived inner-city neighborhoods (Wilson 1987, see also Anderson 1999 Borjas 1995,
Caldeira 2000, Katzman et al. 2004, Loury 2002).

                                                                                                  5
        More positive arguments about the consequences of jobs have emerged in the context
of recent research on social interactions and networks. The large literature on social capital
that has begun to dominate international debates on social development in the 1990s has
traditionally considered the link between jobs and social outcomes as a two-way relationship.
People’s access to jobs (and other economic and social outcomes) is determined by their
social background, their network of friends and contacts (Bourdieu 1984, 1986, Granovetter
1973, 1974, see also Coleman 1988). But contacts and interactions in the work place can also
generate trust and ‘bridging’ social ties that help people to collaborate across potentially
divisive ethnic and social boundaries (Kilroy 2012, Varshney 2002, Woolcock and Narayan
2000, WDR 2013: 126ff).

        Cross-country studies suggest that these types of social relations can contribute to
improved outcomes at the aggregate level. Key proxies of peaceful social relations, like
average levels of self-reported trust, or ‘civic attitudes’, are typically robustly and positively
correlated with national growth rates and stability (Delhey and Newton 2003, Easterly et al.
2006, Knack and Keefer 1997, Putnam 1993, Woolcock and Narayan 2000.) 1 Instrumental
variables used in these studies further suggest that the extent of trust, civicness or social
capital in a society is related to initial levels of fractionalization between ethnic groups, as
well as to historical inequalities and middle class sizes (Easterly 2001, Easterly and Levine
1997, Easterly et al. 2006, Knack and Keefer 1997, Rodrik 1999, see also Larsen 2007,
Rothstein and Uslaner 2005).

        Even though these studies do not typically account directly for labor market
outcomes, some evidence on the link between jobs and social cohesion can be gained from
research on social and labor market policies. In political science a large comparative literature
on welfare state regimes and capital-labor relations argues that higher levels of equality and
social cohesion in countries like Sweden or Denmark are explained by historically less
confrontational relations between workers and employers. These successes have been
attributed to more effective institutions for the mediation of employers’ and workers’
interests, as well as to more generous social protection policies that redistribute the benefits
of growth between winners and losers of economic reform (Esping-Andersen 1990, Huber
and Stephens 2012, Iversen and Soskice 2009, Larsen 2007, Lindert 2004, Rothstein and


1
 Evidence for social capital is less consistent. Delhey and Newton (2003) and Knack and Keefer (1997) find no
positive effects of the density of social associations on economic development.

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Uslaner 2005). 2 More recently a widely noted contribution by Acemoglu and collaborators
(2012) describes variations in social cohesion and labor relations as equilibrium outcomes of
the international division of labor. According to the authors Scandinavian societies are able to
maintain their more ‘cuddly’ forms of capitalism by free-riding on technological innovations
generated by nations (like the US or UK) with more liberal and competitive labor markets.

           The flip side of these more collaborative arrangements is that also advanced levels of
welfare state development and worker protection can go along with very deep divides within
the working-age population. On the one hand collective bargaining over work conditions and
social policies can lead to higher levels of social cohesion if institutions and policies are put
in place to share the benefits of economic growth, even with groups with weaker links to the
labor market. On the other hand, the negotiation of employment conditions can result in deep
divides if those in protected positions prioritize their interests in job security over the broader
goal of ensuring wide participation in the labor market. The consequences can be labor
market and social protection policies that favor interests of labor market ‘insiders’ at the price
of very high barriers of entry into the labor market (Lindbeck and Snower 2002, King and
Rueda 2008, Rueda 2005, 2006). 3




    III.      Links between jobs and social cohesion discussed in this paper

           Even though the literature has documented many potential connections between labor
markets and social cohesion systematic evidence on these interactions is often surprisingly
scarce. Detailed links between individual level work histories and macro-economic labor
market trends are obviously difficult to establish. Most studies of social development have
thus treated labor market dynamics as an influence that operates in the background, without
rigorous exploration of their precise effects on social outcomes. Likewise, at the micro level,
many recent advances in research design that enable analysts to identify causal effects of
work on household economic welfare have not yet translated into the dimensions of interest
in the context of social cohesion. For example, panel surveys, which provide increasingly
2
  Theoretical models have variably explained these outcomes to partisan politics and class-related distributive
bargaining between capital and labor (Esping-Andersen 1990, Huber and Stephens 2012, Korpi 1983, Lindert
2004), or to functional responses of employers to changing demands for skills and security (Hall and Soskice
2001).
3
  Workers and employees in protected long-term contracts are typically defined as ‘insiders’; individuals in non-
permanent jobs as ‘outsiders’. However, the literature is divided over the precise definitions (Lindbeck and
Snower 2002).

                                                                                                                7
robust information about the role of jobs for individual trajectories out of poverty, only
infrequently report social indicators like trust or social and political activities. This has made
it difficult to link work-related experiences to individual behaviors and attitudes that are
normally associated with higher levels of social cohesion.

       In the light of these limitations evidence for this paper primarily comes from research
that has explored narrower aspects of the jobs-social cohesion relationship. In sociology and
economics there is now a large and increasingly rigorous scholarship that provides estimates
of social and economic barriers to social inclusion and mobility in and around labor markets.
Other survey-based and ethnographic research has analysed how widely used indicators of
social cohesion, such as trust, civic associations and subjective wellbeing, vary along with
employment status. While these studies do not typically permit claims that work causes
differences in social outcomes, they provide a first indication how experiences and
behaviours related to social cohesion differ across relevant groups in the labor market.

       For the purpose of this review a useful starting point is a simplified framework of the
interaction between social and political institutions and labor market outcomes (Figure 1.)
Starting from the the ‘social atomization’ view in sociology I first discuss social processes
that influence selection into the labor market. The evidence reviewed here concentrates on the
rich interdisciplinary literature on occupational and earnings mobility, as well as on group-
and location-specific influences, such as residential and social segregation. These processes
relate primarily to the broader inclusion-centered definition of social cohesion used in this
paper. However, there are also theoretical reasons to argue that unfair social barriers to work
can facilitate conflict and the breakdown of peaceful group relations.

       The next section discusses the potential positive consequences of jobs for social
cohesion. Drawing on literature on social capital I will argue that, once people are in work,
associations and interactions made in and around the work place can contribute to social
cohesion by forging ties across otherwise divisive social or ethnic barriers. I discuss these
outcomes with the help of survey and ethnographic evidence on social associations and
relations of trust shared by members of the work force, as well on the relevance of these
experiences for inter-group and –ethnic relations. Other positive effects of jobs reviewed in
the article include work-related life satisfaction. Among policy makers subjective wellbeing
is increasingly regarded as a central indicator for non-monetary dimensions of economic and
social development (OECD 2011:55ff, Dolan and Metcalfe 2012). I discuss differences in

                                                                                                8
subjective wellbeing between the employed and unemployed, as well as possible social
interactions and spill overs that influence the likelihood that experiences of joblessness
translate into conflict.

        The third step seeks to identify consequences of labor market segmentation and work-
related interactions for the negotiation of employment and social policies. Following the
literature on ‘insider politics’ I focus on the possibility that people in more secure jobs use
their superior social relations to advance their own interests of worker protection. The
evidence reviewed includes micro-level data on political attitudes and preferences of the
employed and unemployed as well as comparative analysis of labor market policies. The
section concludes by discussing social protection and employment policies that help to
overcome deeper social barriers to equal participation in the labor market.




                           Figure 1: Pathways discussed in the paper




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    IV.      Social institutions and unequal access to jobs

          Under the framework outlined above the first link is from social institutions to jobs. In
the language of economics this works primarily through the uneven selection of individual
into different sections of the labor market. Some workers, because of their disadvantaged
background, face a lower likelihood of permanent employment or upward mobility in the
labor market. The key mechanisms involved are class or identity related inequalities in
human capital endowments and career trajectories, as well as identities and behaviors
associated with group- and location-based processes of social segregation.



Occupational mobility

          Under the social atomization perspective of classical sociology there is a long
tradition of linking class background to individual mobility experiences. In particular the
Weberian tradition in sociology has related class and status background to differences in
individual ‘life chances’. These status-related opportunities are manifest in the skills and
human capital different status groups bring to the labor market, as well as in broadly similar
earning expectations, levels of security, chances of advancement, and relations of control and
autonomy that are observable within certain categories of occupation (Breen and Rottman
1995, Erikson and Goldthorpe 1992, Grusky and Weeden 2006, 2007). Conceptually this
association between class-related endowments and individual outcomes works in similar
ways as in the growing economic literature on opportunity equality (see for instance
Bourguignon 2006, Roemer 1998, Sen 1985): ‘In both cases emphasis is placed on the
opportunities that a given set of endowments affords, thus leaving open the possibility that
such opportunities may be exercised or realized in different ways (depending on preferences
or “luck”)’ (Grusky and Kanbur 2006:17). 4

          Economists, albeit less concerned with notions of class, also recognize that socially
inscribed status roles and identities can influence social and economic outcomes. Akerlof and

4
 Grusky and Kanbur (2006) go on to note that a class-analytical lens may help to resolve many analytical
challenges of poverty and inequality analysis that have arisen in the wake of the recent literature on capabilities
and multidimensional wellbeing; including the possibility of summarizing multiple personal attributes in a
single measure of social or occupational class (see also Grusky and Weeden 2007).

                                                                                                                 10
Kranton (2000) have argued that social identities, including how people view themselves and
others, can have an important effect on individual behaviors and opportunities. They suggest
that the incorporation of socially prescribed identities and behaviors into the utility function
help explain a range of outcomes that contribute to inequality and stratification, such as
gender discrimination or the economics of social exclusion and poverty. Loury (2002) has
argued in the context of racial inequality that stereotypes about Afro-Americans not only
influence employers’ attitudes towards black applicants. They also alter the behavior and
expectations of Afro-American workers themselves. These arguments receive some support
from experimental studies, which show that members of disadvantaged groups generally
perform less well, when they are primed about relevant social identities (Steele 1997, Steele
and Aronson 1995).

       The strongest evidence about the role of social background for occupational
opportunities is found in the cross-disciplinary literature on intergenerational mobility. In
sociology there is a large and diverse body of literature for industrialized countries that
documents often substantial parent-child correlations along ordinal social status categories or
discrete occupational classes (see for example Blau and Duncan 1967, Grusky and Di Prete
1990, Featherman and Hauser 1978, for earlier reviews of this literature see Morgan et al.
[eds.] 2006, Bertaux, D. and P. Thompson [eds.] 1997). Because parental background is not
freely chosen these studies can argue with relatively strong credibility that systematic
correlations between father-son pairs reflect unfair disadvantage associated with family
circumstances. In economics there are equally large bodies of research on economic mobility
and opportunity equality. These studies variably document family-related differences in the
education and human capital of children and young workers (for overviews see Bourguignon
et al. 2007, 2007a, World Bank 2006), and in the earnings expectations of young workers
(Azevedo and Bouillon 2006, Bowles et al. [eds.] 2005, Ferreira and Gignoux 2008, Ferreira
and Veloso 2003, Roemer 2002).

       Analysts have made important progress to overcome methodological objections to the
study of intergenerational mobility. For example, concerns that changing incomes over the
life-cycle introduce measurement error in the estimation of father-son correlations are now
routinely addressed in the literature on earnings mobility (Azevedo and Bouillon 2009,




                                                                                             11
Ferreira and Veloso, 2006). 5 However, for a variety of reasons, mobility literature still faces
some limitation in documenting specific links between labor markets and individual
opportunities. Sociologists have often treated occupational class as a mostly nominal
construct, with less attention paid to the operationalization and empirical tests of the
concept. 6 This has contributed to the segmentation of the field, which often makes it difficult
to compare and evaluate results across studies (Grusky and Kanbur 2006, Morgan 2006).
Economists, on the other hand, have typically studied questions of status and social mobility
in the broader dimension of income. This more general approach provides only limited
insights into mobility trajectories for specific occupational classes (see for example Bowles et
al. [eds.] 2005. For exceptions see Bossuroy and Cogneau 2008 and WDR: 136). 7

         Another problem is the difficulty of linking individual mobility experiences to
aggregate labor market developments. In advanced economies, like the US, a number of
longer-term studies have suggested that the importance of class-based advantage diminished
during the period of relatively steady post-war growth (Featherman and Hauser 1978), and
even in the more volatile decades of the 1970s and 1980s (Grusky and Di Pretre 1990, Hout
1988). These studies also suggest that returns to experience and schooling increased during
the same period for men, but less so for women. However these claims are usually not based
on systematic analysis of the interaction between individual mobility trajectories and specific
labor market dynamics or policies. Outside of advanced economies evidence is even more
limited, since the data series on mobility trajectories are typically too short to permit
meaningful comparisons with macro-economic changes (Azevedo and Bouillon 2009).

         A more general concern for the purpose of this paper is that it is often not clear how
unfair limitations to individual mobility influence more narrowly defined aspects of social
cohesion, such as inter-group relations. On the hand it is notable that countries with less
conflictual social relations, like the Nordic nations or Canada, typically emerge in
international comparisons as the societies with the highest levels of mobility (Azevedo and
Bouillon 2009, Figure 2). Evidence and theoretical reasoning from developed and developing
countries further suggests that low prospects for upward mobility increase the risk of crime or

5
  More precisely this is typically done by estimating least-squares regression of sons’ earnings on fathers’
earnings controlling for ages for both generations or by constructing measures of permanent income for fathers
and sons (Azevedo and Bouillon 2009, Ferreira and Veloso, 2006).
6
  There are of course exceptions. See for instance Ganzeboom and Treiman (1996).
7
  This happens mostly for operational reasons. However, it probably also has to do with the traditional preference
of economists for income based measures of inequality (Grusky and Kanbur 2006).

                                                                                                               12
violent conflict (see below, as well as Collier et al. 2003), and that populations generally
object more strongly to perceived inequalities in opportunity equality than to inequalities in
outcomes (see for instance Gaviria 2007).

         On the other hand already casual observation suggests that there are many instances
where societies can maintain high levels of social stability; even in the face of very persistent
disadvantages for certain groups. Even people who feel they are currently disadvantaged may
express strong support for existing institutional arrangements if they perceive (mistakenly or
correctly) strong chances for their own future upward mobility (Hirschman 1973, Picketty
1995). In other cases individual responses to limited mobility prospects will be influenced by
other social interactions and contexts. These additional influences are only incompletely
captured by purely household-specific estimates of intergenerational mobility and thus
require more complex approaches that also take into account the presence of intervening
social institutions. The following paragraphs and the section on subjective wellbeing below
will discuss more evidence on these contextual influences.




Social segregation

         While social limits to occupational mobility have been seen as the primary threat to
social cohesion in the earlier sociological literature more recent contributions have focused
on processes of social and residential segregation. Typically these studies make more direct
claims about the breakdown of peaceful group relations than the literature on occupational
mobility. The sociologist Wilson observed in the late 1980s that the concentration of
impoverished disadvantaged black families in deprived inner city neighborhoods in the US
increasingly led to a breakdown of social ties and interactions across ethnic and status divides
(Wilson 1987). According to Wilson these segregation processes helped to perpetuate racial
and economic inequalities because they led to a loss of social role models, social isolation,
and a tendency for inner-city youth to engage in ‘deviant’ behavior such as school drop-out,
joblessness or drug abuse. 8


8
  Wilson’s work on urban poverty triggered a large cross disciplinary literature on the social consequences of
residential segregation. This research has provided additional qualitative case studies and quantitative
evaluations of the effects of social isolation on social relations, education, and economic opportunities of
residents of deprived neighbourhoods (see below, as well as Anderson 1999 Borjas 1994, 1995, Durlauf and
Young [eds.] 2001, Evans et al. 1992, Loury 2002). The literature on social exclusion has also associated the
breakdown of social relations with processes of residential segregation.

                                                                                                                 13
         Subsequent research illustrated how these experiences of social isolation can
undermine social relations and cohesion. For example a study that followed youths in poor
urban neighborhoods in Ecuador over time found that those involved with in violent gangs
had joined ‘because they were searching for the support, trust, and cohesion—social capital—
that they maintained their families did not provide, as well as because of the lack of
opportunities in the local context.’(Moser 2009, cited in the WDR 132f). Similar evidence
has been presented for youths in the US, where a street code based on demonstrations of
individual strength and the ability to ‘command respect’ from others had emerged as ‘a
cultural adaptation to a profound lack` of faith in the police and the judicial system’
(Anderson 1999: 34).

         Processes of residential and social segregation involve social transformations that
reach well beyond the economic processes typically studied in the context of labor market
analysis. 9 Notwithstanding this broader focus there are some indications that social
segregation has direct impacts on labor market outcomes. In developed economies a number
of studies have illustrated that living in deprived neighborhoods is associated with much
more frequent and more extended experiences of unemployment and education and earnings
(Borjas 1995, Cutler and Glaeser 1997, van Ham and Manley 2010). 10 In Latin America there
is a large literature that argues that rising unemployment rates and the wide-spread loss of
manufacturing jobs in the formal sector during the structural adjustment of the 1980s and
1990s contributed to social and residential segregation, with consequences similar to those
described for developed countries (Baker 2001, Caldeira 2000, Fadda et al. 2000, Katzman et
al. 2004, Katzman and Retamoso 2007). 11

         In other developing regions the rich literature on community development and social
capital also suggest that social interactions and associations can vary across entire
communities in ways that directly influence individual economic and professional prospects.
Individuals in better connected communities are often embedded in the type of ‘bridging’
social relations that provide access to insurance, information on jobs and commercial
opportunities or mutual learning (see below, as well as Minten and Barrett 2008, Udry and

9
  In the language of class analysis concerns about social segregation often go a long with a shift in focus from
conventional class categories based on occupational categorization alone to alternative social attributes like low
education, dysfunctional family structures, and social exclusion (this is generally summarized under the broader
term ‘underclass’, see for example Grusky and Kanbur 2006:14).
10
   Most of these studies document neighbourhood effects in interactions with racial inequalities.
11
   Other case studies document community-level social costs of economic downsizing in more recent time
periods. See for example Dudwick 2012, WDR: 132f.

                                                                                                                14
Conley 2004, Vasilaky 2010). This is in contrast to poorer communities, where social
associations tend to be of the ‘strong’ or ‘binding type’ that tend to undermine individual
initiative and rarely provide contacts to jobs or insurance outside the immediate community
(Barrett 2005, Woolcock and Narayan 2000).

           However, while this literature often provides compelling illustrations of the social
costs of the spatial concentration of poverty it typically cannot show that segregation has
negative impacts beyond individual or household-level sources of disadvantage. In particular
the causal identification of the consequences of local peer group interactions has been very
difficult, due to the possibility of self-selection of disadvantaged and lower skill households
into impoverished communities and networks (Aaronson 1998, Evans et al. 1992). Other
problems concern the difficulty of distinguishing effects of peer group interactions from other
contextual influences shared by all members of a local group or community (Durlauf 2006,
Durlauf and Young [eds.] 2001, Manski1993, 2000).

           To this date the most robust evidence is provided by studies that use government
interventions into residential choices as ‘quasi-experiments’ to identify the effect
neighborhoods on individual outcomes. A recent study of a Swedish government program
that randomly assigned refugees to areas with different degrees of job availability found that
individuals placed in areas with fewer work opportunities had lower employment levels,
which often persisted almost a decade after the intervention (Aslund et al. 2010, the authors
find that doubling the number of jobs in the initial location is associated with 2.9 percentage
points higher employment probability 9 years after the program). Evaluations of the widely-
cited US-based ‘Moving to Opportunity Program’ showed that families from deprived inner
city neighborhoods who were randomly allocated vouchers to move to non-poor census tracts
had lower adult unemployment rates (Rosenbaum and Harris 2001: 338), reduced adolescents
arrest for violent crimes (Ludwig et al. 2001), 12 and a lower prevalence of injuries or personal
crimes after the intervention (Katz et al. 2001).

           However, it is important to note that the evidence available so far is only limited to
families that used the vouchers, making it difficult to extrapolate findings to the broader
population of the poor (Durlauf 2006: 161). Moreover, results from these quasi experiments
are not always fully consistent. For example, another study of the Moving to Opportunity
Program by Katz et al. (2001) found no effect on adult employment rates, earnings or welfare
12
     Ludwig et al. (2001) found a reduction in arrest rates between 30 to 50 %.

                                                                                              15
usage, even though there were other positive effects on health and behavioral outcomes for
children and adults. Overall, the literature should thus be read as providing suggestive
evidence that processes of residential segregation add to inequalities and exclusion in and
around the labor market. But in most cases more rigorous research is needed, to identify the
robustness and precise magnitude of these impacts.




     V.      The transitional role of jobs

          The second link under the framework in Figure 1 involves pathways from jobs to
social cohesion. Once people are in work, jobs can play an important transformative function
for social development outcomes. The next paragraphs discuss these transformative
functions, by reviewing evidence on the impact of work-place interactions on ‘bridging’
social relationships. In addition, I examine the association between jobs and subjective
wellbeing and the social and policy contexts that influence this link.


          Labor markets and social interactions

          There is rich anecdotal evidence from the literatures on political partisanship and
ethnic conflict that interactions in the work place can bridge social divides. These arguments
are typically based on the idea that the atomizing effects of social identities and segregation
are less severe in the work place than in the choice of neighborhoods or social associations
(Kilroy 2012, Mutz and Mondak 2006: 141). Because people typically have fewer
opportunities to choose their co-workers, and because business relations are often entered out
of economic necessity, jobs can provide the opportunity to encounter people of very different
ethnic and social backgrounds (WDR: 126).

          Probably the strongest potential to overcome social barriers in and around jobs arises
from the type of social and civic associations highlighted in the literature on social capital
(Granovetter 1973, 1974, Woolcock and Narayan 2000). Analysis of a large sample of
responses from the World Values Survey data by Wietzke and McLeod (2012) finds that
across countries at different income levels those in work and more autonomous jobs generally
participate in more associations. 13 The results of this study should only be considered as


13
  As with SWB the effect of unemployment gradually declines from high to low income countries but it is still
borderline significant in the poorest nations. Similar results are reported for job quality and autonomy.

                                                                                                            16
indicative as it is based on simple cross-sectional correlations that cannot account for possible
selection of more socially enterprising individuals into better jobs and social networks.
Another more robust analysis of Indonesian survey data that tracked people’s level of
community participation over time found that men and women who became unemployed
between 2000 and 2007 were less likely to be involved in community activities (controlling
for personal attributes). In some locations this result was observed in spite of a general
increase in community activities, indicating that individual and household effects of
unemployment can influence personal social outcomes, independent of social and community
contexts (Giles et al. 2012). 14

        Related survey analysis from the US indicates also provides support for the
hypothesis that workplaces involve greater exposure to people of dissimilar perspectives or
race than family relations or social activities (2013, Mutz and Martin 2001, Mutz and
Mondak 2006). Kilroy (2011) finds in Trinidad and Tobago that for between 81 and 41
percent of study respondents work brought them into contact with people of a wider range of
races than their social life. These studies also tend to show positive effects of work-place
interactions on political tolerance and dialogue, even though the usual concerns about self-
selection and measurement error apply (see below, Mutz and Mondak 2006, Banaszak and
Leighley (1991).

        Anecdotal evidence and ethnographic studies suggest that professional and
commercial interactions can reduce the risk of conflicts between groups that usually entertain
tense relations (Dani et al. 1999, Kilroy 2012, see also Pickering 2006). A widely cited study
by Varshney (2002) found that economic interdependence of Muslims and Hindus through
business organizations, trade unions, political parties, and professional associations, helped
avert outbreaks of ethnic violence in some Indian cities, while ethnic riots were more
frequent in less interdependent cities. Survey research from Bosnia and Herzegovina and the
former Yugoslav Republic of Macedonia, documents that the work place constituted the most
important area for inter-ethnic cooperation, ahead of neighbourhoods and local social
associations (Dani et al. 1999, Pickering 2006, WDR 2013: 15). Other examples of business
relations between Greeks and Turks during the war in Cyprus, or smuggling between



14
  Note however, that this study could not account for possible time variant personal attributes that could
simultaneously influence respondents’ employment status and their social relations. Examples are illness or
other short-term economic shocks.

                                                                                                              17
Kosovo-Serbs and Kosovo-Albanians suggest that professional interests can trump over
ethnic antagonisms, even in the most hostile political environments (Kilroy 2012: 9). 15

        Although most of these examples are individually compelling, the evidence reviewed
here comes with several caveats. While participation in professional interactions may not be
entirely voluntary, the majority of studies reviewed here do not deal with the possibility of
selection bias. For example in the majority of papers reviewed it is not possible to determine
whether reported positive consequences of professional interactions are truly the result of
work-related associations, or whether particularly trusting or ‘socially enterprising’
individuals have selected into relevant networks.

        At a more fundamental level the literature on work-related interactions typically fails
to deal with the possibility that wider societal benefits of work-related interactions are
undermined by more basic processes of social stratification and segregation. If access to jobs
is highly unequal, also the positive effects of work-based contacts are likely to differ across
groups with uneven attachment to the labor market. Whether these positive effects are shared
evenly across groups will depend on the extent of interdependencies between groups with
higher and lower levels of labor market participation. In the worst case work-related
interactions will deepen divides between labor market insiders and outsiders, without positive
consequences for the distribution of opportunities or the extent of social segregation (see
below).

        Another problem is that it is not always clear whether social relations formed in the
work place really have the potential to alter the nature of social relations to the extent argued
in the literature. Social identities are usually multifaceted, and professional roles are
complemented by multiple other sources of identification. 16 Whether identities and
collaborative attitudes formed in the work place spill over into these alternative social
domains is at least questionable (Kilroy 2012). A related difficulty is that it is often unclear
whether trusting relationships and friendship created at work cause people to modify attitudes
towards the entire group to which their colleagues belong. Studies that ask respondents about
their levels of trust do not typically distinguish between generalized trust and views towards
specific groups. This makes it much harder to assess whether and to what extent feelings of

15
   Economists have long recognized that economic interdependence lowers the likelihood of conflict (for an
overview see Kilroy 2012).
16
   Moreover, work-related identities are of decreasing importance in many advanced industrial societies (Grusky
and Kanbur 2006).

                                                                                                            18
trust and association generated in the work place spill over into more peaceful group
interactions at the aggregate level (Delhey et al. 2011, Kilroy 2012).



Jobs and subjective wellbeing.

       Another increasingly widely investigated dimension of social development in the
recent policy literature is Subjective Wellbeing (SWB, OECD 2011:55ff, Dolan and Metcalfe
2012). Earlier psychological research suggests that job satisfaction and financial security
related to regular employment can be an important source of wellbeing (for an overview see
Diener et al. 1999: 293). These psychological outcomes also typically emerge as important
correlates of other dimensions of social cohesion in individual and cross-national research.
For example personal self-esteem, trust, and social capital are usually strongly associated
with SWB in international survey data (Helliwell and Putnam 2004, Kahneman 1999, see
also Larsen 2007, Rothstein and Uslaner 2005).

       From the perspective of this review SWB is particularly useful for summarizing the
non-economic costs of uneven participation in the labor market. In high income countries
there is already a large literature that documents often considerable differences in life
satisfaction between the employed, the unemployed, and people in temporary jobs. One of the
earliest studies on the subject found that the experience of joblessness in Britain ‘depressed
well-being more than any other single characteristic, including important negative ones such
as divorce and separation’ (Clark and Oswald 1994). Subsequent research also shows that
these effects are typically robust to the inclusion of controls for income. This supports the
often noted claim that unemployment also affects individual wellbeing through non-monetary
channels, such as the loss of positive psychological rewards from work or the sense of
exclusion from work-related interactions (for overviews and evidence see Darity and
Goldsmith 1996, Di Tella et al 2001, 2003, Frey 2008). There are also fairly robust
indications for this part of the world that the causal link flows from unemployment to
subjective wellbeing. For instance, research carried out on German panel data suggests that
the same individuals experience considerable reductions in life satisfaction when they lose
their job (Winkelmann and Winkelmann 1998, Frey 2008: 47). Dawson and Veliziotis (2013)
who use a similar panel design for the UK, find large difference in self-reported well-being
between permanent and temporary employees that appear to be explained by less satisfaction
with job security for the latter group.

                                                                                           19
        Outside of the group of advanced industrial societies, trends are largely consistent in
emerging economies with more evolved labor markets. Estimates on a pooled sample of
survey respondents from Latin America show a clear and unambiguous effect of
unemployment on reported life satisfaction, even when a range of personal and household
attributes are accounted for (Graham 2008, see also Graham and Pettinato 2002). However,
these findings are based on simple correlations. More robust evidence has been presented for
Russia by Eggers et al. (2006). They find that the effect of personal unemployment on life
satisfaction was four times worse than having experienced a divorce. Because this study is
based on longitudinal data, it can also account for initial levels of life-satisfaction, mitigating
some concerns about unobserved personal characteristics that often plague cross-sectional
survey analysis of SWB.

        In spite of the relative robustness of these effects at the individual level, there are
many – often little understood – contextual influences that can determine how individual
experiences of work and unemployment translate into social cohesion outcomes at the
aggregate level. A well-known result from the cross country literature on life satisfaction is
that average SWB does not improve with marginal increases in income once a certain level of
material wellbeing has been attained (see Easterlin 1974, Easterlin et al. 2010, as well as
Inglehart and Welzel 2005). This suggests that the described non-economic effects of
unemployment may reflect realities in countries with more formalized labor markets that do
not apply in the same to lower income nations with endemic poverty and a high incidence of
informal and subsistence labor. For example the aforementioned correlation analysis of
World Values Survey data by Wietzke and McLeod (2012) finds that the negative wellbeing
effect of unemployment drops quite considerably as one moves from high and middle income
nations to lower income countries, all accounting for the usual range of controls regularly
used in the literature (such as income, education, age, or family status). 17 These results are
consistent with a large body if economic research, which suggests that the primary channel
out of poverty in low income nations is a transition from informal or agricultural work into
more rewarding forms of wage-employment (for overviews see WDR 2013, Azevedo et al. 2012).

        Beyond these economic influences social contexts also matter. For one, there is
relatively strong evidence that social interactions and segregation processes described above

17
   The authors also find that an index that summarizes people’s self-assessments of their work as involving
manual or cognitive, routine or creative tasks and the degree of independence they have at work does not predict
life satisfaction in low income countries.

                                                                                                             20
also influence how individuals perceive the experiences of unemployment. Work by Stutzer
and Lalive (2004) finds that the unemployed suffer greater losses to wellbeing in
communities that display lower levels of tolerance towards welfare recipients. 18 At the same
time several other studies suggest that the relative wellbeing losses of unemployment tend to
be lower in segregated communities with higher unemployment (this holds for the UK, see
Clark and Oswald 1994, as well as for Russia, see Eggers et al. 2006). 19 While these
processes are still little understood, they indicate that the social interactions associated with
extreme segregation also mediate how individual experiences in and around the labor market
translate into personal social preferences. In some cases extreme segregation and the
concentration of peer-group interactions within relatively harmonious communities can
actually limit the social comparisons across social and status groups that are normally
expected to increase the likelihood of conflict. However, these outcomes are clearly not
desirable as they are accompanied by deep latent group divides.

         Other research suggests that levels of wellbeing of the unemployed may be affected
by spill overs and institutional and policy contexts. For example cross-country comparisons
by Wietzke (2012) show that also nations with relatively protected labor markets and large
relative wellbeing differences between the employed and unemployed, often have higher
absolute levels of life satisfaction for those not in work. 20 In a similar vein descriptive
analysis of wellbeing levels by Di Tella et al. (2003) documents that, while increases in
unemployment benefits in Europe from 1975 to 1992 did not narrow differences in reported
happiness between the unemployed and the employed, absolute levels of wellbeing rose for
both groups (Di Tella et al. 2003). 21 These results suggest that social and policy-induced
wellbeing spill overs could explain why even countries with relatively large differences
between labor market groups often experience high levels of social stability over time


18
   The authors approximate these norms through local support for a national referendum about the reduction of
unemployment benefits. The study accounts for possible local interactions between labor market outcomes and
work norms with the help of regional fixed effects.
19
   This may also have to do with the fact that high unemployment rates tend to reduce subjective wellbeing of
people with and without work simultaneously (Di Tella et al. 2001, Eggers et al. 2006).
20
   While based on non-experimental data this study mitigates endogeneity concerns through instrumental
variable estimates and by linking personal wellbeing to national policy-contexts that are not under the control of
individual respondents. Wietzke and McLeod (2012) also find that absolute levels of wellbeing of the
unemployed follow similar cross sectional trends when mapped against an index of the stringency of labor laws,
even though there are clear and stable differences compared to those out of work. They also speculate that
weaker social protection policies and high unemployed often lead to a heightened sense of insecurity among the
unemployed as well as those in work.
21
   The authors hypothesize that this result has to do with the reduction of the financial risks of unemployment
for people in and out of work.

                                                                                                               21
(provided the consequences for absolute wellbeing are sufficiently strong to ‘offset’ the
negative consequences of social comparisons). However, these are again early results and
more detailed and rigorous analysis is needed to better understand the social mechanisms and
interactions involved.




     VI.      Insider – outsider politics

           In the light of the preceding discussion a central question for the jobs-social cohesion
link is how societies create the environments for positive interactions and spill overs that
improve the wellbeing of all groups in society. Economic and labor market institutions
clearly matter in this context. Economic theory suggests that societies with more consensual
institutions are generally better able to absorb conflicts between winners and losers of
economic and political transformations (Fernandez and Rodrik 1991, Alesina and Drazan
1991). This is supported by several empirical studies, which document that societies with
more consensual institutions experience fewer and shorter economic crises (Rodrik 1999, see
also Easterly et al. 2006), or that crises are at least not more severe than in otherwise
comparable countries (Forteza and Rama 2006). 22 These more stable conditions have obvious
advantages for all groups of society who will benefit from the absence of economic insecurity
and volatility.

           The flip side is that many of the positive consequences of work-based interactions can
deepen social differences if they interact with existing economic divides and segregation
processes. Political scientists and economists have long been concerned that collective action
problems and resulting lower levels of political organization among the unemployed facilitate
the emergence of policies that favor the interests of labor market ‘insiders’ over those of
‘outsiders’ (see for instance Lindbeck and Snower 2002, Olson 1982, Rueda 2005, 2006). 23




22
   The recent review of literature on labor regulations carried out for the WDR 2013 concludes that, outside of
extreme scenarios of excessive regulation or de-regulation, efficiency enhancing and undermining effects of
labor market institutions can be found side by side (World Bank 2013:26, see also, Freeman 2008, 2009, and
OECD 2011).
23
   Reviews of labor market policies provide some indications that this is indeed the case. In most countries labor
market regulations disproportionally benefit young males to the detriment of other more vulnerable groups
(OECD 2011, WDR 2013, Lindbeck and Snower 2002). Similar evidence is found by Heckman and Pages
(2000) for Latin America where job security provisions are comparatively costly (OECD 2011: 162) and by
Botero et al. (2004) at the cross-national level.

                                                                                                                22
        These ‘insider’ politics can be reinforced if the described positive effects of work-
related interactions interact with existing segregation processes: Psychological rewards and
social capital associated with work-place interactions may only benefit those who already
have better economic opportunities. This not only increases differences between the
employed and unemployed but also potentially undermines successful collective action across
groups with uneven access to the labor market.

        Micro data provides some indicative support for these processes. The aforementioned
correlation analysis by Wietzke and McLeod (2012) indicates that people who derive positive
experiences and self-esteem from their work are more likely to engage constructively with
public institutions. The authors document that those in work are more likely to participate in
demonstrations or to sign petitions. These results hold across a wide sample of nations, even
though the estimates are less robust in lower income countries. People in higher quality jobs
also tend to be more politically active in all sub-samples, except low income countries.

        Other contributions suggest that lower levels of political activism among the
unemployed also go along with political attitudes that can undermine support for political
institutions. Cross-country correlation analysis of World Value Survey data by Altindag and
Mocan (2010) documents that the unemployed tend to hold more negative views about
democracy and stronger preferences for rogue leaders. 24 The authors also find that high and
sustained rates of unemployment undermine collective trust in democracy. The results are
based on simple cross-sectional correlations only. However, the findings are broadly
consistent with earlier research on electoral behavior, which suggests that support for
incumbent representatives declines with deteriorating personal economic conditions (Markus
1988, Nannestad and Paldam 1997) and weaker macro-economic outlooks in a constituency
(Kramer 1971, see also Stigler 1973).

        There are indications that these uneven levels of political engagement also go along
with the sort of insider-outsider differences over labor market policies often discussed in the
political economy literature. Contrary to conventional political economy models, which tend
to assume that labor and social democratic movements share a common concern with
unemployment, workers are often deeply divided over labor market polices. Survey responses
by labor market ‘outsiders’, who are defined by insecurity of their work contracts, indicate a

24
  However, Wietzke and McLeod (2012) find no systematic associations between employment status and self-
expressed confidence in the government and democratic institutions.

                                                                                                       23
stronger preferences for employment generating ‘active’ labor market policies, such as public
employment centers and administration, labor market training, or subsidized employment.
This is in contrast to labor market insiders, defined by the security of their contracts, who
tend to prefer stronger measures of worker protection and lower tax-spending on employment
policies (Rueda 2005, see also Rueda 2006). 25 Other studies, based on larger samples of
countries, suggest that lower skilled members of the work force tend to report stronger
support for government redistribution (Haggard et al. 2013, see also Blanchflower and
Freeman 1997, Corneo and Gruner 2002, Cramer and Kaufman 2011).

         Cross country comparisons of labor market policies suggest that these differences in
behaviors and political preferences are reflected in actual political outcomes. Even among
social democratic or labor-dominated governments there are well-documented examples of
policies that favor protection of the interests of labor market insiders over active employment
generating policies (Rueda 2005, 2006, Shayo 2009). These outcomes are attributed to higher
levels of political activism and stronger aversion to costlier employment generating policies
among the former group (Rueda 2005, 2006). In addition, outsider-friendly policies often fail
to materialize because of the existence of social associations and alliances outside of the labor
market. 26

         In the literature on social exclusion similar arguments have been made about social
policies towards low-skilled, temporary workers. In particular ‘workfare’ programs designed
to restrict access to social benefits and to push recipients into the labor market are often
blamed for the perpetuation of precarious low-paid work relations, as these interventions
have the potential to interrupt individual employment histories and skills acquisition (King
and Rueda 2008: 279, McKnight 2002). This can result in a ‘reserve army’ of workers in low
cost, flexible and temporary jobs who meet the low-cost labor needs of the economy, but do
not enjoy the prospects for upward mobility of more advantaged groups (Byrne 1999, King
and Rueda 2008).

         The practical lessons that result from these observations usually return full circle to
the root causes of low inclusion and mobility in the labor market. Constructive long-term


25
  These results are based on the 1996 Eurobarometer survey.
26
  In particular religious beliefs, rural background, and nationalistic identities have been shown to reduce
political positioning around work or status lines (Haggard et al. 2013, Shayo 2009, see also Kaufman 2009).
Insider-outsider differences are often reduced when the vulnerability of labor market insiders increases due to
regulatory reform or rising unemployment rates (Rueda 2006: 388f, Iversen and Soskice 2001).

                                                                                                                  24
strategies should reduce the chances of individuals entering low-paid and insecure work or
helping low-skill temporary workers move from low-pay and often subsidized jobs into
standard forms of employment (McKnight 2002: 117, see also King and Rueda 2008, OECD
2011). Other effective interventions would seek to offset limits to upward mobility by
ensuring higher minimum skills standards and better educational services to children from
disadvantaged backgrounds (McKnight 2002: 117).




   VII.      Conclusion

       Policy makers increasingly recognize that well-functioning labor markets are an
important precondition for peaceful social relations (WDR 20143, OECD 2011). Yet, to this
point there has been surprisingly little comparative analysis how jobs influence personal
experiences and interactions around social cohesion. This article has sought to fill this gap, by
reviewing international evidence on the link between jobs and individual wellbeing and
behaviors.

       The literature reviewed suggests that the relationship between jobs and social
cohesion is best studied as a two-way relationship. On the one hand there is relatively robust
evidence that social institutions and identities related to class or family background can limit
opportunities and mobility in the labor market. This can undermine social cohesion by
weakening social inclusion and leading to a very uneven distribution of the benefits of work.
On the other hand there are many reasons to suspect that jobs can have the positive
transformative consequences for social relations postulated in recent high profile policy
publications on social cohesion. In particular, jobs emerge as important correlates of a range
of outcomes typically associated with social cohesion, such as subjective wellbeing, social
associations or or personal levels of social and political activism.

       In spite of the many individually compelling examples of how jobs can influence
social cohesion the review has revealed at least two caveats that undermine the optimism
about the transformative role of jobs that is implicit in reports like the WDR. The first is the
complexity of the social processes and institutions that determine how individual work-
related experiences translate into interactions and spill overs between groups with uneven
attachment to the labor market. In particular highly segmented labor markets raise the risk
that work-related interactions and collective action can exacerbate divides between labor

                                                                                              25
market ‘insiders’ and ‘outsiders’. While some of the social institutions behind these social
barriers are probably harder to change, other responses will require more complex
interventions that reach beyond narrowly defined labor market reforms to address more
fundamental differences in the distribution of skills and social advantages.

        The other caveat is the relatively tentative nature of much of the evidence on which
claims of the positive effects of jobs are based. Rigorous analysis of the social interactions to
which many of the positive effects of work are attributed is notoriously difficult because of
the potential selection problems and other contextual influences involved. These problems are
amplified because many of the advances in the design of studies and surveys that are used to
document the positive effects of work on economic outcomes have often not (yet) spilled
over into the analysis of non-monetary dimensions of jobs. Against this background future
analytical progress will depend to a large extent on more routine integration of social
cohesion indicators in the monitoring of labor market outcomes. In other contexts more
complex research designs will be needed that integrate careful political economy analysis at
the aggregate level with detailed study of individual level interactions in the work-place and
other relevant social contexts.




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