The Resilience and Reinforcement of Group Cohesion in the Face of Economic Inequality

Jan Jozwik, Tom Lane, Lina Song and Fan Zhang
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Jan Jozwik: School of Economics, University of Nottingham Ningbo China
Tom Lane: Newcastle University Business School
Lina Song: Nottingham University Business School
Fan Zhang: Independent researcher

No 2026-02, Newcastle Economics Discussion Papers from Newcastle University Business School, Economics Subject Group

Abstract: Building on evidence that group cohesion drives economic efficiency, we hypothesise income inequality influences efficiency by altering cohesion, with the direction depending on inequality type. Using a novel experimental design with extensive group interactions and a state-of-the-art group cohesion measure, we confirm stronger cohesion is associated with more efficient interactions. Group cohesion is strengthened by inequality between groups, a mechanism previously overlooked. Furthermore, unexpectedly, inequalities within groups do not hinder cohesion. These results suggest interpersonal relationships display resilience to economic disparities, challenging the prevailing argument that inequality must harm cohesion, and undermining a pathway through which it could reduce efficiency.

Keywords: economic inequality; group cohesion; social identity; cooperation; coordination; public goods; weak-link game; economic experiment (search for similar items in EconPapers)
JEL-codes: C99 D31 D64 D91 (search for similar items in EconPapers)
Date: 2026-10
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Persistent link: https://EconPapers.repec.org/RePEc:nwc:wpaper:2026-02

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