This is not a trivial issue. If using contacts seems to have little overall impact on labor market outcomes, then perhaps economic models of the labor market can safely ignore "embeddedness"-the connections and ties among individuals-without sacrificing explanatory power.

Key Words peer effects, social networks, social homophily, fixed effects models ■ Abstract Although there is a large literature on social capital, empirical estimates of the effect of social capital may be biased because of social homophily, the tendency of similar people to become friends with each other. Despite the methodological difficulties, a recent literature has emerged across several different disciplines that tries to estimate the causal effect of social capital. This paper reviews this recent empirical literature on social capital, paying close attention to the statistical and theoretical assumptions involved. Overall, there is evidence that genuine progress has been made in estimating the effect of social capital. The reviewed articles should provide useful examples for future research.

This paper uses social network and spatial data from the National Longitudinal Study of Adolescent Health (Add Health) to examine the effect of racial residential segregation on school friendship segregation in the U.S. The use of hierarchical models allows us to simultaneously estimate the effect of race, within-school spatial segregation, and school diversity on friendship choice using the Add Health data. We use these results to predict the decline in friendship segregation that would occur if across-and within-school residential segregation were eliminated in U.S. metropolitan areas. The results suggest that about a third of the level of racial friendship segregation in schools is attributable to residential segregation. Most of this effect is due to geographic segregation across schools rather than residential segregation within schools.

Occupations are central to the stratification systems of industrial countries, but they have played little role in empirical attempts to explain the well-documented increase in wage inequality that occurred in the United States in the 1980s and 1990s. We address this deficiency by assessing occupation-level effects on wage inequality using data from the Current Population Survey for 1983 through 2008. We model the mean and variance of wages for each occupation, controlling for education and demographic factors at the individual level to test three competing explanations for the increase in wage inequality: (1) the growth of between-occupation polarization, (2) changes in education and labor force composition, and (3) residual inequality unaccounted for by occupations and demographic characteristics. After correcting for a problem with imputed data that biased Kim and Sakamoto’s (2008) results, we find that between-occupation changes explain 66 percent of the increase in wage inequality from 1992 to 2008, although 23 percent of this is due to the switch to the 2000 occupation codes in 2003. Sensitivity analysis reveals that 18 percent of the increase in inequality from 1983 to 2002 is due to changes in just three occupations: managers “not elsewhere classified,” secretaries, and computer systems analysts.

Recent observers have pointed to a growing polarization within the U.S. public over politicized moral issues-the so-called culture wars. DiMaggio, Evans, and Bryson studied trends over the past 25 years in American opinion on a number of critical social issues, finding little evidence of increased polarization; abortion is the primary exception. However, their conclusions are suspect because they treat ordinal or nominal scales as interval data. This article proposes new methods for studying polarization using ordinal data and uses these to model the National Election Study (NES) abortion item. Whereas the analysis of this item by DiMaggio et al. points to increasing polarization of abortion attitudes between 1972 and 1994, this article's analyses of these data offers little support for this conclusion and lends weight to their view that recent concerns over polarization are overstated.