1. Exploring Income Differentials -- a comparison between human and social capital approaches Dr Yaojun Li BA MA MPhil (Oxon) DPhil (Oxon) Reader in Sociological Analysis Department of Sociology Birmingham University Email: y.li.3@bham.ac.uky.li.3@bham.ac.uk Tel: 0121-4158625 Web: http://www.sociology.bham.ac.uk/staff/yaojun_li.htmhttp://www.sociology.bham.ac.uk/staff/yaojun_li.htm

2. A World of Capitalists But where is class? (‘Sociology is all about class’.) Human Capital Social Capital Cultural Capital Economic Capital ?

3. Essential elements --Human capital approach Investment in education and training, or any other activity that can improve one’s skills and increase one’s productivity. The investment entails direct costs and foregone earnings, but people expect returns of enhanced future income streams: reduced economic risks, greater economic stability and steady economic advancement (deferred consumption or deferred gratification) Knowledge & experience about the labour market Language proficiency

4. The network tradition The strengths of weak ties (Granovetter 1973) The strengths of strong ties (Lin et al. 1981) The Position Generator Approach (Lin, 2001) (but do we have the data?) The conventional method Putnam’s (and Bourdieu’s) approach Essential elements --Social capital approach

5. Putnam’s and Bourdieu’s views on social capital connections among individuals – social networks and the norms of reciprocity and trustworthiness that arise from them (Putnam, 2000: 19). the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalised relationships of mutual acquaintance and recognition (Bourdieu, 1993: 51).

6. Analytical Framework Human capital indicators Social capital indicators Changes in earnings (97-01) Covariates soc var

7. Operationalisation of variables Human capital indicators Educational qualifications Whether foreign born Years in the UK if foreign born Participation in f/t education/training (1997-2001 ) Covariates (at w7) Sex Marital status Ethnicity Age Age squared Social capital indicators Class Three dimensions of social capital at W7 (see below) Has sb outside HH who can help find job (Waves GIK )

8. Dimensions of social capital (as permitted by data available in BHPS) Dimensions of social capital (1) Neighbourhood attachment

9. Dimensions of social capital (2) Support network

10. Dimensions of social capital (3) Civic engagement

11. Item Response Theory (IRT) Model where Y is the response to item i from individual j, is the score of individual j on the latent factor, is the factor loading for item i, is the threshold for a response of K or above. For an item with K categories, 1 to K, = . Standard identification restrictions are necessary and we estimate the variance of the latent variable but constrain the first factor loading to 1. All variables have to be measured in some units and this restriction merely implies that the latent variable is to be measured in the units of item 1.

12. Table 1 Latent scores for dimensions of social capital Number Cat.Loading SE Neighbourhood attachment I belong to this neighbourhood 51.00 (-) Friends in my neighbourhood mean a lot51.22(0.032) Advice is available from my neighbourhood50.93(0.024) I borrow & exchange favours with neighbours50.48(0.014) Would work to improve my neighbourhood50.43(0.013) Would remain in the neighbourhood50.68(0.017) I am similar to others in the neighbourhood50.87(0.021) I regularly stop and talk with neighbours50.92(0.023) Latent variable variance5.44 (.206) z=26.42

13. Table 1 Continued. Social networks Number Cat.Loading SE Anyone to listen to you when you need to talk?31.00(-) Anyone to help you out in a crisis?30.99(0.033) Anyone to be totally yourself with?30.84(0.029) Anyone really appreciates you as a person?30.87(0.031) Anyone to comfort you when you are very upset?31.03(0.036) Anyone outside h/h to help you if depressed?30.52(0.019) Anyone outside h/h to help you get job?30.30(0.012) Anyone outside h/h to lend you money?30.34(0.013) Latent variable variance 8.45 (.435) z=19.43

14. Table 1 Continued. Civic participation Number Cat. Loading SE Pooled items*61.00(-) Political or environmental groups30.93(0.097) Trade Unions20.19(0.029) Tenants/resident’s group20.59(0.056) Religious group20.68(0.066) Social group2-0.07(0.034) Sports club20.17(0.027) Professional organisations20.65(0.056) Latent variable variance2.78 (.374) z= 7.43

15. Table 2Income differences in W7

16. Table 3Income changes W7-11

17. Conclusion For income differences at wave 7 Effects of demographic attributes as expected No obvious ethnic penalties Human capital, especially as indicated by higher educational qualifications, is highly important, controlling for demographic factors Social capital, especially as indicated by class, plays an even more important role than human capital, but bonding capital has a negative and bridging capital positive role, controlling for personal characteristics Social capital relatively more important than human capital when directly compared

18. Conclusion For income changes between w7-w11 Blacks and Pakistanis/Bangladeshis were making notable improvements in their earnings in the five years The effects of demographic, human and social capital in this regard are similar in pattern to that in income differentials at wave 7 Additional indicators for human capital (attending full time educational institutions) and for social capital (having people outside the household help find a job) are both significantly related to higher earnings, holding constant all other factors in the models Again there is evidence of more notable effects of social than human capital effects, but bonding social capital has a negative effect

19. AppendixPosition Generator for Social Capital (Lin, 2000: p124, Appendix 7.2)