Pathways from Jobs to Social Cohesion


                                            Frank-Borge Wietzke


There is growing recognition that access to good jobs is an important driver of social cohe-
sion. Although the economic dimensions of labor market outcomes are relatively well docu-
mented, evidence on the link between social cohesion and jobs is still surprisingly scarce.
This paper, based on an earlier background report for the WDR 2013, presents empirical
evidence for pathways between labor market outcomes and social cohesion. The findings in-
dicate that formal employment is associated with a range of social outcomes and behaviors
that are typically associated with higher levels of social cohesion. However, there are also
indications that this relationship varies across dimensions of social wellbeing. In particular,
social interactions and political activism among those in regular employment can either
improve the quality of aggregate institutions or deepen existing social divides. labor
markets, social cohesion, subjective wellbeing. JEL codes: I31, J01, 015



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 dis-
cusses 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 flag-
ship report on social cohesion, argues that labor market outcomes are critical deter-
minants of social stability, both because they influence the level and distribution of
labor earnings and because jobs are critical loci of social interactions (OECD 2011).
   Although the 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 that is related, 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, such

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as levels of trust, civic attitudes, or the quality of political institutions (Knack and
Keefer 1995, 1997; Easterly and Levine 1997; Rodrik 1999; Easterly et al. 2006).
However, few of these studies have specifically analyzed how behaviors and interac-
tions that relate to social cohesion vary along with people’s employment situations.
   This paper, based on an earlier background report for the WDR 2013 on Jobs
(Wietzke and McLeod 2012), seeks to fill this 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 2013, 127ff;
Woolcock 2011). This involves a concern with subjective outcomes, such as trust
and wellbeing, as well as ‘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 definition 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 distri-
bution of social and economic opportunities is often identified as a primary source
of peaceful relations between relevant social groups in modern capitalist societies
(de Barros et al. 2009; Collier et al. 2003).
   This paper integrates recent cross-disciplinary literature on these different di-
mensions 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 the 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 and on group-level and neighborhood inter-
actions 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 2013, 126ff; OECD 2011, 154). The
workplace and markets often offer opportunities for social interactions that extend
beyond narrow 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 that are increasingly targeted by policy
makers, such as life satisfaction or social and institutional spillovers (OECD 2011;
WDR 2013, 85f ). I focus on differences in life satisfaction across individuals of
different employment status and on possible wellbeing spillovers that reduce
differences between groups with uneven attachment to the labor market.



96                                     The World Bank Research Observer, vol. 30, no. 1 (February 2015)
   The last step discusses possible political threats to social cohesion. Political scien-
tists and economists have traditionally been concerned that collective action prob-
lems and resulting lower levels of political organization among the unemployed
may lead to very deep political differences across groups in the labor market
(Lindbeck and Snower 2002; Olson 1982). These differences may lead to more per-
manent divides if groups with better attachment to the labor market use their superi-
or social and political contacts to promote policies of worker protection over costlier
employment policies that facilitate the entry of outsiders into the labor markets (King
and Rueda 2008; Rueda 2005, 2006). From a social cohesion perspective, this raises
a challenge for policy makers to implement policies that protect the interests of both
labor market ‘insiders’ and ‘outsiders’.1 Only integrated policies that directly address
the root causes of uneven skills distribution and mobility prospects are likely to reap
the full benefits of the potential transformative functions of jobs.
   The review finds relatively convincing evidence for many of the postulated
pathways between social cohesion and labor markets. For instance, research on in-
tergenerational mobility suggests that parents’ occupational background is of de-
creasing importance as a determinant of economic opportunity (though there are
contrasting results for other dimensions of family background, such as education or
income). Similarly, ethnographic and survey research on work-related interactions
provides strong illustrative examples that shared interests and interactions in the
workplace can help bridge social divides.
   However, there is less evidence that these separate effects combine to produce
more cohesive societies at an aggregate level. Typically, the transitions from individ-
ual work-related experiences to the quality of aggregate social relations are mediat-
ed by a multitude of wider social and economic influences. These results suggest
that from a social cohesion perspective, individual work-related experiences are
most likely best studied in conjunction with aggregate social wellbeing outcomes
and institutions. A purely micro-level analysis based on the 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 do not.
   A related lesson is the relatively tentative nature of much of the evidence on the
outcomes of social relations around jobs. Research on the economic consequences of
jobs traditionally struggles with well-known selection problems as better-skilled or
more motivated people may select into better jobs. These problems are typically mag-
nified in the analyses 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 address these endogeneity issues conclusively. Therefore, the
review closes on a cautiously optimistic note: although there are strong indications
that jobs can have the postulated positive consequences for social cohesion, a more
careful analysis is required to substantiate these claims with robust evidence.

Wietzke                                                                                97
Previous Debates on Labor Markets and Social Cohesion
Previous scholarship has taken various approaches to the interaction between
social cohesion and labor markets. First, what I call the ‘social atomization’ view
has focused on the processes of labor market stratification and social segregation
that undermine individual opportunities and mobility experiences. This view high-
lights the potentially divisive effects of increased professional specialization and the
division of labor. Other contributions emphasize the potentially positive conse-
quences of work-related interactions and identities, including the type of ‘bridging’
social relationships that are now emphasized in policy debates on social cohesion
and jobs as well as political and institutional solutions for conflict resolution, which
are often linked to more inclusive labor market and social protection policies.
   Sociological research on work relations has traditionally been dominated by the
social atomization view. Marx famously predicted that workers who were 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 continue to play an important role in the work of some contem-
porary analysts of capitalist relations and politics (Wright 1979, 1997). Durkheim
and Weber, often considered the founders of ‘modern sociology’, also struggled with
the question of how functionally integrated societies could maintain their internal
coherence through the capitalist transformation. Weber (1978), 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 in-
equalities (Norton and De Haan 2012). A large body of literature on ‘social exclu-
sion’ in Europe has argued that macro-economic transformations, such as slowing
economic growth and a shift away from manual work, would diminish the econom-
ic opportunities of lower-skilled workers and undermine formal and informal
systems of solidarity (Silver 1994; Castells 1996; Paugam 1996; Byrne 1999; Hills
et al. 2002; Alphonse et al. 2008). In the United States and Latin America, similar
arguments have been made in the context of growing trends toward residential and
racial segregation around deprived inner-city neighborhoods (Wilson 1987; Borjas
1995; Anderson 1999; Caldeira 2000; Katzman et al. 2004; Loury 2002).
   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 began to dominate international debates on social develop-
ment in the 1990s has traditionally considered the link between jobs and social out-
comes to be a two-way relationship. People’s access to jobs (and other economic and

98                                     The World Bank Research Observer, vol. 30, no. 1 (February 2015)
social outcomes) is determined by their social background and by their network
of friends and contacts (Granovetter 1973, 1974; Bourdieu 1984, 1986; Coleman
1988). However, contacts and interactions in the workplace can also generate trust
and ‘bridging’ social ties that help people collaborate across potentially divisive
ethnic and social boundaries (Woolcock and Narayan 2000; Varshney 2002; Kilroy
2012; WDR 2013, 126ff ).
   Cross-country studies have suggested that these types of social relations can con-
tribute to improved outcomes at the aggregate level. Key proxies of peaceful social
relations, such as average levels of self-reported trust, or ‘civic attitudes’, are typical-
ly robustly and positively correlated with national growth rates and stability
(Putnam 1993; Knack and Keefer 1997; Woolcock and Narayan 2000; Delhey and
Newton 2003; Easterly et al. 2006).2 The 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 and to
historical inequalities and middle class sizes (Easterly and Levine 1997; Knack and
Keefer 1997; Rodrik 1999; Easterly 2001; Rothstein and Uslaner 2005; Easterly
et al. 2006; Larsen 2007).
   Though these studies do not typically account directly for labor market out-
comes, some evidence on the link between jobs and social cohesion can be obtained
from research on social and labor market policies. In political science, a large com-
parative body of literature on welfare state regimes and capital-labor relations
argues that higher levels of equality and social cohesion in countries such as
Sweden or Denmark are explained by historically less confrontational relations
between workers and employers. These successes have been attributed to more ef-
fective institutions for the mediation of employers’ and workers’ interests and to
more generous social protection policies that redistribute the benefits of growth
between winners and losers of economic reform (Esping-Andersen 1990; Lindert
2004; Rothstein and Uslaner 2005; Larsen 2007; Iversen and Soskice 2009; Huber
and Stephens 2012).3 More recently, a widely noted contribution by Acemoglu
et al. (2012) describes variations in social cohesion and labor relations as equili-
brium 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 (such as the United
States or the United Kingdom) with more liberal and competitive labor markets.
   However, as this review illustrates, the flip side of these more collaborative ar-
rangements is that advanced levels of welfare state development and worker protec-
tion can co-exist 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 that have weaker links to the
labor market. On the other hand, the negotiation of employment conditions can

Wietzke                                                                                  99
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.



Links between Jobs and Social Cohesion Discussed in this Paper
Though the literature has documented many potential connections between labor
markets and social cohesion, systematic evidence on these interactions is often sur-
prisingly 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. Similarly, at the micro level, many recent advances in research
design that enable analysts to identify the causal effects of work on household eco-
nomic welfare have not yet translated into the dimensions of interest in the context of
social cohesion. For example, panel surveys, which provide increasingly robust infor-
mation about the role of jobs for individual trajectories into and out of poverty, only in-
frequently report social indicators such as trust or social and political activities. This
situation 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 light of these limitations, the evidence for this paper primarily comes from re-
search that has explored narrower aspects of the relationships between jobs and
social cohesion. In sociology and economics, there is now a large and increasingly
rigorous body of 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 analyzed how the widely used indicators of social
cohesion, such as trust, civic associations, and subjective wellbeing, vary along
with employment status. Although these studies do not typically permit claims that
work causes differences in social outcomes, they provide a first indication of how ex-
periences and behaviors 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 ‘social atomization’ view in sociology, I first discuss the
social processes that influence selection into the labor market. The evidence re-
viewed here concentrates on the rich interdisciplinary literature on occupational
and earnings mobility and on group- and location-specific influences, such as resi-
dential 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.

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Figure 1. Pathways discussed in the paper




   The next section discusses the potential positive consequences of jobs for social
cohesion. Drawing on literature on social capital, I argue that once people are in
work, associations and interactions made in and around the workplace can contrib-
ute to social cohesion by forging ties across otherwise divisive social or ethnic barri-
ers. I discuss these outcomes using survey- and ethnography-based studies of social
associations and relations of trust shared by members of the work force and evi-
dence on the relevance of these experiences for inter-group and inter-ethnic rela-
tions. Other positive effects of jobs reviewed in the article include work-related life
satisfaction. Among policy makers, subjective wellbeing is increasingly considered
to be a central indicator for non-monetary dimensions of economic and social devel-
opment (OECD 2011, 55ff; Dolan and Metcalfe 2012). I discuss differences in sub-
jective wellbeing between the employed and unemployed as well as possible social
interactions and spillovers that influence the likelihood that experiences of jobless-
ness will translate into conflict.
   The third step seeks to identify the 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 the political

Wietzke                                                                              101
attitudes and preferences of the employed and unemployed as well as a comparative
analysis of labor market policies. The section concludes by discussing social protec-
tion and employment policies that help overcome deeper social barriers to equal
participation in the labor market.



Social Institutions and Unequal Access to Jobs
Within the framework outlined above, the first link is from social institutions to
jobs. In the language of economics, this link works primarily through the uneven
selection of individuals 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
From the social atomization perspective of classical sociology, there is a long tradi-
tion of linking class background to individual mobility experiences. In particular,
the Weberian tradition in sociology has related class and status background to dif-
ferences in individual ‘life chances’. These status-related opportunities are manifest
in the skills and human capital that different status groups bring to the labor
market and in the broadly similar earning expectations, levels of security, chances
of advancement, and relations of control and autonomy that are observable within
certain categories of occupations (Erikson and Goldthorpe 1992; Breen and Rottman
1995; 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 (Sen 1985; Roemer 1998;
Bourguignon 2006): ‘In both cases emphasis is placed on the opportunities that a
given set of endowments affords, thus leaving open the possibility that such oppor-
tunities may be exercised or realized in different ways (depending on preferences or
“luck”)’ (Grusky and Kanbur 2006, 17).4
   Economists, though they are typically less concerned with notions of class, also
recognize that socially inscribed status roles and identities can influence social and
economic outcomes. Akerlof and 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 helps explain a
range of outcomes that contribute to inequality and stratification, such as gender

102                                   The World Bank Research Observer, vol. 30, no. 1 (February 2015)
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 toward black applicants but also alter the
behavior and expectations of Afro-American workers themselves. These arguments
receive some support from experimental studies, which show that members of dis-
advantaged groups generally perform less well when they are primed about relevant
social identities (Steele and Aronson 1995; Steele 1997).
   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; Featherman and Hauser 1978; Grusky and Di Prete 1990; for
earlier reviews of this literature, see Bertaux and Thompson 1997; Morgan et al.
2006). Because one’s parental background is not freely chosen, these studies can
argue with relatively strong credibility that systematic correlations between father-
son pairs reflect an unfair disadvantage associated with family circumstances. In
economics, there are equally large bodies of research on economic mobility and op-
portunity equality. These studies variably document family-related differences in
the education and human capital of children and young workers (for overviews, see
World Bank 2006; Bourguignon et al. 2007a, 2007b) and in the earnings expecta-
tions of young workers (Roemer 2002; Ferreira and Veloso 2003; Bowles et al.
2005; Azevedo and Bouillon 2009).
   Analysts have made important progress in overcoming 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
(Ferreira and Veloso 2006; Azevedo and Bouillon 2009).5 However, for a variety of
reasons, the mobility literature still faces some limitations 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 approach 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
et al. 2006). Economists, in contrast, have typically studied questions of status and
social mobility in the broader dimension of income. This more general framework
provides only limited insights into mobility trajectories for specific occupational
classes (Bowles et al. 2005; for exceptions, see Bossuroy and Cogneau 2008; WDR
2013, 136).7
   Another problem is the difficulty of linking individual mobility experiences to ag-
gregate labor market developments. In advanced economies such as the United

Wietzke                                                                               103
States, a number of longer-term studies have suggested that the importance of
class-based advantage decreased during the period of relatively steady post-war
growth (Featherman and Hauser 1978) and diminished even in the more volatile
decades of the 1970s and 1980s (Hout 1988; Grusky and Di Pretre 1990). 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 trajecto-
ries and specific labor market dynamics or policies. Outside advanced economies,
the evidence is even more limited because 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 the more narrowly defined
aspects of social cohesion, such as inter-group relations. On the one hand, it is notable
that countries with less conflictual social relations, such as 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 rea-
soning from developed and developing countries further suggests that low prospects for
upward mobility increase the risk of crime or violent conflict (see below and Collier
et al. 2003) and that populations generally object more strongly to perceived inequali-
ties in opportunity equality than to inequalities in outcomes (Gaviria 2007).
   On the other hand, casual observation suggests that there are many instances in
which societies can maintain high levels of social stability, even in the face of very
persistent disadvantages for certain groups. For example, people who feel that they
are currently disadvantaged may express strong support for existing institutional ar-
rangements if they perceive (mistakenly or correctly) strong chances for their own
future upward mobility (Hirschman 1973; Piketty 1995; Benabou and Ok 2001).
In other cases, individual responses to limited mobility prospects are influenced by
other social interactions and contexts. These additional influences are only incom-
pletely captured by purely household-specific estimates of intergenerational mobility
and thus require more complex analysis that also takes into account the presence of
intervening social institutions. The following paragraphs and the section on subjec-
tive wellbeing below discuss more evidence on these contextual influences.


Social Segregation
Although social limits to occupational mobility have been seen as the primary
threat to social cohesion in the earlier sociological literature, more recent contri-
butions have focused on the 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

104                                     The World Bank Research Observer, vol. 30, no. 1 (February 2015)
observed in the late 1980s that the concentration of impoverished disadvantaged
black families in deprived inner-city neighborhoods in the United States increasing-
ly led to a breakdown of social ties and interactions across ethnic and status divides
(Wilson 1987). According to Wilson, these segregation processes helped 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 dropping out, joblessness, or drug abuse.8
   Subsequent research illustrated how these experiences of social isolation under-
mine social relations and cohesion. For example, a study that followed youths in
poor urban neighborhoods in Ecuador over time found that those involved with
violent gangs had joined ‘because they were searching for the support, trust, and co-
hesion—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, as cited in
WDR 2013, 132f). Similar evidence has been presented for youths in the United
States, where a street code based on demonstrations of individual strength and the
ability to ‘command respect’ from others emerged as ‘a cultural adaptation to a pro-
found 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 neighbor-
hoods is associated with much more frequent and more extended experiences of un-
employment and education and earnings (Borjas 1995; Cutler and Glaeser 1997;
van Ham and Manley 2010).10 In Latin America, a large body of literature argues
that rising unemployment rates and the widespread loss of manufacturing jobs in
the formal sector during the structural adjustment of the 1980s and 1990s contrib-
uted to social and residential segregation, with consequences similar to those de-
scribed for developed countries (Caldeira 2000; Fadda et al. 2000; Baker 2001;
Katzman et al. 2004; Katzman and Retamoso 2007).11
   In other developing regions, the rich literature on community development and
social capital also suggests that social interactions and associations can vary across
entire communities in ways that directly influence individual economic and profes-
sional prospects. Individuals in better-connected communities are often embedded
in the type of ‘bridging’ social relations that provide access to insurance, informa-
tion on jobs and commercial opportunities, or mutual learning (see below; Udry
and Conley 2004; Minten and Barrett 2008; Vasilaky 2010). This is in contrast to
poorer communities, where social associations tend to be of the ‘strong’ or ‘binding
type’ (in other words, they tend to undermine individual initiative and rarely
provide contacts for jobs or insurance outside the immediate community; Woolcock
and Narayan 2000; Barrett 2005).

Wietzke                                                                           105
    However, although this literature often provides compelling illustrations of the
social costs of the spatial concentration of poverty, it typically cannot show that seg-
regation has negative impacts beyond individual- or household-level sources of dis-
advantage. 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-skilled households into impoverished communities and
networks (Aaronson 1998; Evans et al. 1992). Other problems concern the diffi-
culty of distinguishing effects of peer group interactions from other contextual influ-
ences that are shared by all members of a local group or community (Manski 1993,
2000; Durlauf and Young 2001; Durlauf 2006).
    To date, the most robust evidence is provided by studies that use government in-
terventions into residential choices as ‘quasi-experiments’ to identify the effect of
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 inter-
vention (Aslund et al. 2010). The authors find that doubling the number of jobs in
the initial location is associated with a 2.9-percentage-point higher employment
probability nine 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 adolescent arrests 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 limited to
families that used the vouchers, making it difficult to extrapolate findings to the
broader population of the poor (Durlauf 2006, 161). Moreover, the 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 usage, although there were other posi-
tive effects on health and behavioral outcomes for children and adults. Overall, the
literature should be read as providing suggestive evidence that processes of residen-
tial segregation add to inequalities and exclusion in and around the labor market.
However, in most cases, more rigorous research is needed to identify the robustness
and precise magnitude of these impacts.



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

106                                    The World Bank Research Observer, vol. 30, no. 1 (February 2015)
function for social development outcomes. The next paragraphs discuss these trans-
formative functions by reviewing the evidence on the impact of work-place interac-
tions on ‘bridging’ social relationships. In addition, I examine the association
between jobs and subjective wellbeing and the social and policy contexts that influ-
ence this link.


Jobs and Social Interactions
There is rich anecdotal evidence from the literature on political partisanship and
ethnic conflict that interactions in the workplace can bridge social divides. These ar-
guments are typically based on the idea that the atomizing effects of social identities
and segregation are less severe in the workplace than in the choice of neighbor-
hoods or social associations (Mutz and Mondak 2006, 141; Kilroy 2012). Because
people typically have fewer opportunities to choose their co-workers and because
business relations are often entered due to economic necessity, jobs can provide the
opportunity to encounter people of very different ethnic and social backgrounds
(WDR 2013, 126).
   The strongest potential to overcome social barriers in and around jobs may arise
from the type of social and civic associations highlighted in the literature on social
capital (Granovetter 1973, 1974; Woolcock and Narayan 2000). An 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 Related
survey analysis also provides support for the hypothesis that workplaces involve
greater exposure to people of dissimilar perspectives or race than do family relations
or social activities (see Mutz and Martin 2001 and Mutz and Mondak 2006 for the
United States and Kilroy 2011 for Trinidad and Tobago). Several of these studies
also show the positive effects of workplace interactions on political tolerance and di-
alogue (Banaszak and Leighley 1991; Mutz and Mondak 2006). However the
results from these articles should only be considered indicative because they are
based on simple cross-sectional correlations that cannot account for the possible se-
lection 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 un-
employed between 2000 and 2007 were less likely to be involved in community ac-
tivities (controlling for personal attributes). In some locations, this result was
observed in spite of a general increase in community activities, indicating that indi-
vidual and household effects of unemployment can influence personal social out-
comes independent of social and community contexts (Giles et al. 2012).14
   Anecdotal evidence and ethnographic studies suggest that professional and com-
mercial interactions can reduce the risk of conflicts between groups that usually

Wietzke                                                                            107
entertain tense relations (Dani et al. 1999; Pickering 2006; Kilroy 2012). A widely
cited study by Varshney (2002) finds that the 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, whereas ethnic riots were more frequent in less interdependent
cities. Survey research from Bosnia and Herzegovina and the former Yugoslav
Republic of Macedonia found that the workplace constituted the most important
area for inter-ethnic cooperation, ahead of neighborhoods and local social associa-
tions (Dani et al. 1999; Pickering 2006; WDR 2013, 15). Other examples of busi-
ness relations between Greeks and Turks during the war in Cyprus or smuggling
between Kosovo-Serbs and Kosovo-Albanians suggest that professional interests can
trump ethnic antagonisms, even in the most hostile political environments (Kilroy
2012, 9).15
   While most of these examples are individually compelling, the evidence reviewed
here comes with several caveats. Although participation in professional interactions
may not be entirely voluntary, the majority of studies reviewed here do not address
the possibility of selection bias. For example, in the majority of papers reviewed, it is
not possible to determine whether the reported positive consequences of profession-
al interactions are truly the result of work-related associations or whether particu-
larly trusting or ‘socially enterprising’ individuals have selected into relevant
networks.
   At a more fundamental level, the literature on work-related interactions typically
fails to address the possibility that wider societal benefits of work-related interac-
tions are undermined by more basic processes of social stratification and segrega-
tion. If access to jobs is highly unequal, 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 depends on the
extent of interdependencies between groups with higher and lower levels of labor
market participation. In the worst case, work-related interactions may 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 workplace really have the potential to alter the nature of social relations to the
extent argued in the literature. Social identities are usually multifaceted, and pro-
fessional roles are complemented by multiple other sources of identification.16
Whether identities and collaborative attitudes formed in the workplace spill over
into these alternative social domains is questionable (Kilroy 2012). A related diffi-
culty is that it is often unclear whether trusting relationships and friendships
created at work cause people to modify attitudes toward 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 toward specific

108                                     The World Bank Research Observer, vol. 30, no. 1 (February 2015)
groups. This makes it much more difficult to assess whether and to what extent feel-
ings of trust and association generated in the work place spill over into more peace-
ful 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 (henceforth SWB; see also OECD
2011, 55ff; Dolan and Metcalfe 2012). Earlier psychological research suggests that
job satisfaction and financial security related to regular employment can be an im-
portant source of wellbeing (for an overview, see Diener et al. 1999, 293). These
psychological outcomes also typically emerge as important correlates of other di-
mensions of social cohesion in individual and cross-national research. For example,
personal self-esteem, trust, and social capital are usually strongly associated to SWB
in international survey data (Kahneman 1999; Helliwell and Putnam 2004;
Rothstein and Uslaner 2005; Larsen 2007).
    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 a large body of literature that documents the often con-
siderable differences in life satisfaction among 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 separa-
tion’ (Clark and Oswald 1994). Subsequent research also shows that these effects
are typically robust to the inclusion of controls for income. This finding 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 ev-
idence, 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 SWB. For instance, research conducted on German
panel data suggests that the same individuals experience considerable reductions in
life satisfaction when they lose their jobs (Winkelmann and Winkelmann 1998;
Frey 2008, 47). Dawson and Veliziotis (2013) use a similar panel design for the
United Kingdom and find large differences in self-reported wellbeing between per-
manent and temporary employees that appear to be explained by less satisfaction
with job security for the latter group.
    Outside the group of advanced industrial societies, the trends are largely consis-
tent in emerging economies with more evolved labor markets. Estimates on a
pooled sample of survey respondents from Latin America show a clear and unam-
biguous effect of unemployment on reported life satisfaction, even when a range of

Wietzke                                                                             109
personal and household attributes are accounted for (Graham and Pettinato 2002;
Graham 2008). 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 is four times worse
than experiencing a divorce. Because this study is based on longitudinal data, it can
also account for initial levels of life satisfaction, thus mitigating some concerns
about unobserved personal characteristics that often plague cross-sectional survey
analyses of SWB.
   Despite the relative robustness of these effects at the individual level, there are
many and often little understood contextual influences that can affect how individ-
ual 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 (Easterlin
1974; Easterlin et al. 2010; Inglehart and Welzel 2005). This finding suggests that
the described non-economic effects of unemployment in countries with more for-
malized labor markets may not apply in the same way in 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 unemploy-
ment drops quite considerably as one moves from high- and middle-income nations
to lower-income countries, 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 of economic research that 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 over-
views, see; Azevedo t al. 2012; WDR 2013).
   Beyond these economic influences, social contexts also matter. There is relatively
strong evidence that the social interactions and segregation processes described
above also influence how individuals perceive experiences of unemployment. Work
by Stutzer and Lalive (2004) finds that the unemployed suffer greater losses to well-
being in communities that display lower levels of tolerance toward welfare recipi-
ents.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 United Kingdom, see Clark and Oswald 1994; for
Russia, see Eggers et al. 2006).19 Although these processes remain little under-
stood, 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 con-
centration of peer-group interactions within relatively harmonious communities
can actually limit the social comparisons across social and status groups that are

110                                   The World Bank Research Observer, vol. 30, no. 1 (February 2015)
normally expected to increase the likelihood of conflict. However, these outcomes
are clearly not desirable because they are accompanied by deep latent group
divides.
   Other research suggests that the levels of wellbeing of the unemployed may be
affected by spillovers and institutional and policy contexts. For example, cross-
country comparisons by Wietzke (2012) show that 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, a descriptive analysis of wellbeing levels by Di Tella et al.
(2003) documents that although increases in unemployment benefits in Europe
from 1975 to 1992 did not narrow the 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 well-
being spillovers could explain why even countries with relatively large differences
between labor market groups often experience high levels of social stability over
time ( provided the consequences for absolute wellbeing are sufficiently strong to
‘offset’ the negative consequences of social comparisons). However, these are early
results, and more detailed and rigorous analysis is needed to better understand the
social mechanisms and interactions involved.



Insider – Outsider Politics
In light of the preceding discussion, a central question for the link between jobs and
social cohesion is how societies create the environments for positive interactions
and spillovers 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 inclusive 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 finding is supported
by several empirical studies documenting that societies with stronger institutions
and better inter-group relations experience fewer and shorter economic crises
(Rodrik 1999; Easterly et al. 2006) or crises that 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 that 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 seg-
regation processes. Political scientists and economists have long been concerned
that collective action problems and the resulting lower levels of political organiza-
tion among the unemployed facilitate the emergence of policies that favor the

Wietzke                                                                             111
interests of labor market ‘insiders’ over those of ‘outsiders’ (see, for instance, Olson
1982; Lindbeck and Snower 2002; Rueda 2005, 2006).23
   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 workplace interactions may only benefit
those who already have better economic opportunities. This phenomenon 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 provide some indicative support for these processes. The aforemen-
tioned 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 in low-income countries.
   Other contributions suggest that lower levels of political activism among the un-
employed also accompany political attitudes that can undermine support for politi-
cal institutions. A 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 collec-
tive 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;
Stigler 1973).
   There are indications that these uneven levels of political engagement also ac-
company the insider-outsider differences over labor market policies that are often
discussed in the political economy literature. Contrary to conventional political
economy models, which tend to assume that labor and social democratic move-
ments 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 the insecurity of their work contracts, indicate a stronger preferences
for employment generating ‘active’ labor market policies, such as public employ-
ment 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, 2006).25 Other studies based on larger

112                                    The World Bank Research Observer, vol. 30, no. 1 (February 2015)
samples of countries suggest that lower-skilled members of the work force tend to
report stronger support for government redistribution (Blanchflower and Freeman
1997; Corneo and Gruner 2002; Cramer and Kaufman 2011; Haggard et al. 2013).
   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 doc-
umented examples of policies that favor the 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 aver-
sion to costlier employment-generating policies among the former group (Rueda 2005,
2006). In addition, outsider-friendly policies often fail to materialize because of the ex-
istence 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 toward low-skilled, temporary workers. In particular ‘workfare’ pro-
grams 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 rela-
tions because these interventions have the potential to interrupt individual employ-
ment histories and skills acquisition (McKnight 2002; King and Rueda 2008, 279).
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 strategies should limit the risk of individuals entering low-paid and inse-
cure work or help low-skilled temporary workers move from low-paying and often
subsidized jobs into standard forms of employment (McKnight 2002, 117; King and
Rueda 2008; OECD 2011). Other effective interventions seek to offset the limits to
upward mobility by ensuring higher minimum skills standards and better education-
al services for children from disadvantaged backgrounds (McKnight 2002, 117).



Conclusion
Policy makers increasingly recognize that well-functioning labor markets are an im-
portant precondition for peaceful social relations (WDR 2013; OECD 2011).
However, until now, there has been surprisingly little comparative analysis of 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

Wietzke                                                                                113
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 increasing in-
equalities in the distribution of the benefits of work. On the other hand, there are
many reasons to suspect that jobs can have the positive transformative consequenc-
es for social relations that have been postulated in recent high-profile policy publica-
tions on social cohesion. In particular, jobs emerge as important correlates of a
range of outcomes that are typically associated with social cohesion, such as subjec-
tive wellbeing, social associations, or personal levels of social and political activism.
   Despite the many individually compelling examples of how jobs can influence
social cohesion, this review has revealed at least two caveats that undermine the op-
timism about the transformative role of jobs that is implicit in reports such as the
WDR. The first is the complexity of the social processes and institutions that deter-
mine 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 increase the risk that work-related interactions
and collective action may exacerbate divides between labor market ‘insiders’ and
‘outsiders’. Although some of the social institutions behind these social barriers are
probably more difficult to change, other responses will require more complex inter-
ventions that reach beyond the 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 no-
toriously 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 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 the more routine integration of social cohesion in-
dicators in the monitoring of labor market outcomes. In other contexts, more
complex research designs will be required that integrate careful political economy
analysis at the aggregate level with detailed study of individual-level interactions in
the workplace and other relevant social contexts.



Notes
Frank-Borge Wietzke is currently at the London School of Economics, Department of International
Development, Houghton Street, WC2A 2AE, UK. Email: f.b.wietzke@lse.ac.uk. 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


114                                       The World Bank Research Observer, vol. 30, no. 1 (February 2015)
Hentschel, Dena Ringold, Kathleen Beegle, Emmanuel Jimenez, and three anonymous reviewers. The
author is also grateful for research assistance from Catriona McLeod.
    1. Workers and employees in protected long-term contracts are typically defined as ‘insiders’; indi-
viduals in non-permanent jobs are defined as ‘outsiders’. However, the literature is divided over the
precise definitions (Lindbeck and Snower 2002).
    2. 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.
    3. Theoretical models have variably explained these outcomes to partisan politics and class-related
distributive bargaining between capital and labor (Korpi 1983; Esping-Andersen 1990; Lindert 2004;
Huber and Stephens 2012) or to the functional responses of employers to changing demands for skills
and security (Hall and Soskice 2001).
    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 liter-
ature on capabilities and multidimensional wellbeing, including the possibility of summarizing multi-
ple personal attributes in a single measure of social or occupational class (Grusky and Weeden 2007).
    5. More precisely, this is typically done by estimating least-squares regression of sons’ earnings on
fathers’ earnings controlling for the ages of both generations or by constructing measures of perma-
nent income for fathers and sons (Ferreira and Veloso 2006; Azevedo and Bouillon 2009).
    6. There are, of course, exceptions. See, for instance, Ganzeboom and Treiman (1996).
    7. This happens mostly for operational reasons. However, it may also have to do with the tradition-
al preference of economists for income-based measures of inequality (Grusky and Kanbur 2006).
    8. Wilson’s work on urban poverty triggered a large cross-disciplinary literature on the social con-
sequences 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 the eco-
nomic opportunities of residents of deprived neighborhoods (see below; Evans et al. 1992; Borjas
1995; Anderson 1999; Durlauf and Young 2001; Loury 2002). The literature on social exclusion has
also associated the breakdown of social relations with processes of residential segregation.
    9. In the language of class analysis, concerns about social segregation often accompany a shift in
focus from conventional class categories based on occupational categorization alone to alternative
social attributes, such as 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) and WDR (2013, 132f ).
    12. Ludwig et al. (2001) found a reduction in arrest rates of 30 to 50 percent.
    13. As with SWB, the effect of unemployment gradually declines from high- to low-income coun-
tries, but it is still borderline significant in the poorest nations. Similar results are reported for job
quality and autonomy.
    14. Note, however, that this study could not account for possible time-variant personal attributes
that may simultaneously influence respondents’ employment status and their social relations.
Examples are illness or other short-term economic shocks.
    15. Economists have long recognized that economic interdependence lowers the likelihood of con-
flict (for an overview, see Kilroy 2012).
    16. Moreover, work-related identities are of decreasing importance in many advanced industrial
societies (Grusky and Kanbur 2006).
    17. The authors also find that an index that summarizes people’s self-assessments of their work as
involving manual or cognitive and routine or creative tasks and their degree of independence at work
does not predict life satisfaction in low-income countries.
    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.


Wietzke                                                                                               115
    19. This may also involve the fact that high unemployment rates tend to reduce the subjective well-
being of people with and without work simultaneously (Di Tella et al. 2001; Eggers et al. 2006).
    20. Although it is 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 ab-
solute levels of wellbeing of the unemployed follow similar cross-sectional trends when mapped against
an index of the stringency of labor laws, though there are clear and stable differences compared with
those out of work. They also speculate that weaker social protection policies and high unemployment
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.
    22. The recent review of literature on labor regulations conducted for the WDR 2013 concludes
that, outside of extreme scenarios of excessive regulation or de-regulation, the efficiency enhancing
and undermining effects of labor market institutions can be found side by side (Freeman 2008, 2009;
OECD 2011; World Bank 2013, 26).
    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 (Lindbeck and Snower 2002; OECD 2011; WDR 2013). Similar evidence is
found by Heckman and Pages (2000) for Latin America, where job security provisions are compara-
tively costly (OECD 2011, 162), and by Botero et al. (2004) at the cross-national level.
    24. However, Wietzke and McLeod (2012) find no systematic associations between employment
status and self-expressed confidence in the government and democratic institutions.
    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 (Kaufman 2009; Shayo 2009; Haggard
et al. 2013). Insider-outsider differences are often reduced when the vulnerability of labor market in-
siders increases due to regulatory reform or rising unemployment rates (Iversen and Soskice 2001;
Rueda 2006, 388f ).


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