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Economic growth and social capital: happily together ever after?

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  • SARRACINO Francesco

Abstract

Does economic growth go with an increase of social capital over time? A long lasting debate in the economic discipline agrees that higher stocks of social capital enhance economic growth, but overlooked the temporal dimension. Indeed there are reasons to suspect that the positive correlation identified in the literature can not be extended to the relationship over time. Using three proxies of social capital (group membership, trust in others and an index of civicness) and data from the six waves integratedWorld Values Survey / European Value Study data-base I provide evidence confirming that at any point in time, richer countries are also richer in social capital. However, if we compare the time trends of social capital with economic growth, a negative and significant relationship arises. In other words, social capital and GDP go together across countries, but turn to be negatively correlated over time. This paradoxical evidence is compatible with an explanation in terms of increasing economic inequality: in countries experiencing strong increases in inequality, trends of social capital are negatively correlated with economic growth. For countries where economic growth is accompanied by negative or modest increases in inequality, this relationship disappears.

Suggested Citation

  • SARRACINO Francesco, 2011. "Economic growth and social capital: happily together ever after?," LISER Working Paper Series 2011-52, Luxembourg Institute of Socio-Economic Research (LISER).
    • Handle: RePEc:irs:cepswp:2011-52
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    Cited by:

    1. Anna Almakaeva & Eduard Ponarin & Christian Welzel, 2014. "Human Development And Generalized Trust: Multilevel Evidence," HSE Working papers WP BRP 58/SOC/2014, National Research University Higher School of Economics.
    2. Sarracino, Francesco & Slater, Giulia, 2024. "The trust paradox," MPRA Paper 120053, University Library of Munich, Germany.
    3. Mikucka, Malgorzata & Sarracino, Francesco, 2014. "Making economic growth and well-being compatible: the role of trust and income inequality," MPRA Paper 59695, University Library of Munich, Germany.

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    More about this item

    Keywords

    economic growth; social capital; time-series; WVS; EVS;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D60 - Microeconomics - - Welfare Economics - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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