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Social capital and the reproduction of economic inequality in polarized societies

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  • Tewodaj Mogues
  • Michael Carter

Abstract

This paper explores the idea of how wealth is distributed across social groups (ethnic or language groups, gender, etc.) and how such distribution fundamentally affects the evolution of economic inequality. By providing microfoundations suitable for this exploration, the paper hopes to enhance the understanding of when social forces contribute to the reproduction of economic inequality. In tackling this issue, the paper offers contributions in two domains. First, it models social capital as a real capital asset with direct use and collateral value. Second, it extends the concepts of identity, alienation and polarization used by Esteban and Ray (1994). This generalization permits consideration of the multiple characteristics that shape social identity, inclusion and exclusion. It also underwrites a higher-order measure of socioeconomic polarization that permits exploration of the hypothesis that economic inequality is most pernicious and persistent when it is socially embedded. Among other things the paper shows that holding constant the initial levels of economic polarization and wealth inequality, higher socioeconomic polarization increases subsequent income and wealth inequality. Far from being a distributionally neutral panacea for missing markets, social capital in this model may itself generate exclusion and deepen social and economic cleavages.

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File URL: http://hdl.handle.net/10.1007/s10888-005-9001-9
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Bibliographic Info

Article provided by Springer in its journal The Journal of Economic Inequality.

Volume (Year): 3 (2005)
Issue (Month): 3 (December)
Pages: 193-219

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Handle: RePEc:kap:jecinq:v:3:y:2005:i:3:p:193-219

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Web page: http://springerlink.metapress.com/link.asp?id=111137

Related research

Keywords: inequality; social capital; social collateral; socio-economic polarization.; Z130 – Social Norms and Social Capital; O–Economic Development; Technological Change; and Growth.;

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References

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Citations

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Cited by:
  1. Saint-Macary, Camille, 2012. "Are Ethnically Diverse Communities “Bad” Communities? An Empirical Study on Social Capital Formation in Northern Vietnam," Economics Papers from University Paris Dauphine 123456789/11437, Paris Dauphine University.
  2. Chantarat, Sommarat & Barrett, Christopher B., 2008. "Social Network Capital, Economic Mobility and Poverty Traps," MPRA Paper 6841, University Library of Munich, Germany.
  3. Dinda, Soumyananda, 2008. "Social capital in the creation of human capital and economic growth: A productive consumption approach," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(5), pages 2020-2033, October.
  4. Carter, Michael R. & Little, Peter D. & Mogues, Tewodaj & Negatu, Workneh, 2005. "Shocks, Sensitivity and Resilience: Tracking the Economic Impacts of Environmental Disaster on Assets in Ethiopia and Honduras," Staff Paper Series 489, University of Wisconsin, Agricultural and Applied Economics.
  5. Tewodaj Mogues, 2005. "Shocks, Livestock Asset Dynamics, and Social Capital in Ethiopia," Development and Comp Systems 0512006, EconWPA.
  6. Santos, Paulo & Barrett, Christopher B., 2006. "Informal Insurance in the Presence of Poverty Traps: Evidence from Southern Ethiopia," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25487, International Association of Agricultural Economists.
  7. Muhammad Chani & Sajjad Jan & Zahid Pervaiz & Amatul Chaudhary, 2014. "Human capital inequality and income inequality: testing for causality," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(1), pages 149-156, January.
  8. Chani, Muhammad Irfan & Hassan, Mahboob Ul & Shahid, Muhammad, 2012. "Human capital formation and economic development in Pakistan: an empirical analysis," MPRA Paper 38925, University Library of Munich, Germany.
  9. Ronelle Burger & Marisa Coetzee & Carina van der Watt, 2013. "Estimating the benefits of linking ties in a deeply divided society: considering the relationship between domestic workers and their employers in South Africa," Working Papers 18/2013, Stellenbosch University, Department of Economics.
  10. Mogues, Tewodaj, 2008. "A two-dimensional measure of polarization:," IFPRI discussion papers 837, International Food Policy Research Institute (IFPRI).
  11. Carter, Michael R. & Little, Peter D. & Mogues, Tewodaj & Negatu, Workneh, 2007. "Poverty Traps and Natural Disasters in Ethiopia and Honduras," World Development, Elsevier, vol. 35(5), pages 835-856, May.

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