Social networks, role models, peer effects, and aspirations

We review the literature on pathways through which social networks may influence social mobility in developing countries. We find that social networks support members in tangible ways-via access to opportunities for migration, credit, trading relationships, information on jobs, and new technologies-as well as in intangible ways, such as shaping their beliefs, hopes, and aspirations, through role models and peers. Nevertheless, networks can disadvantage non-members, typically the poor and marginalized. Recent evidence suggests a range of policy tools that could help mitigate disadvantages faced by excluded groups: temporary incentives to encourage experimentation into new regions, occupations, or technologies, and role models-real and virtual-to mitigate psychosocial challenges faced by marginalized groups. Targeting large fractions of marginalized groups simultaneously could increase the effectiveness of such policies by leveraging the influence of existing social networks.