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When sociable workers pay off: Can firms internalize social capital externalities?

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  • Ferreira-Lopes, Alexandra
  • Roseta-Palma, Catarina
  • Sequeira, Tiago Neves

Abstract

We use an endogenous growth model to contrast the socially optimal allocation of human capital with the decentralized solution, in a context where workers make the choices that determine social capital accumulation. As social capital is expected to increase productivity but is not traded in markets, a positive social capital externality is identified. We discuss the possibility that, in response to this externality, firms subsidize social capital accumulation activities, incurring into additional costs that are recouped through productivity gains. This reaction by firms may be seen as a justification for some corporate social responsibility actions targeted at workers, although a full internalization of the externality does not look achievable in practice.

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Bibliographic Info

Article provided by Elsevier in its journal Structural Change and Economic Dynamics.

Volume (Year): 23 (2012)
Issue (Month): 2 ()
Pages: 127-136

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Handle: RePEc:eee:streco:v:23:y:2012:i:2:p:127-136

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Web page: http://www.elsevier.com/locate/inca/525148

Related research

Keywords: Corporate social responsibility; Social capital; Human capital; Economic growth;

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References

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  17. Roseta-Palma, Catarina & Ferreira-Lopes, Alexandra & Sequeira, Tiago Neves, 2010. "Externalities in an endogenous growth model with social and natural capital," Ecological Economics, Elsevier, vol. 69(3), pages 603-612, January.
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