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Social ties and economic development

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  • Anjos, Fernando
  • Anchorena, Jose

Abstract

We develop a parsimonious general equilibrium model where agents allocate time across three activities: production, trade, and leisure. Leisure includes time spent socializing, which economizes transaction costs. Our framework yields multiple equilibria in terms of the number of social ties and predicts that the number of social ties is positively associated with development, a relationship we observe in cross-country data. The model captures additional dimensions of data, namely: (i) increasing income inequality, but converging growth rates; (ii) an association between weak social ties and development; and (iii) an association between number of social ties and size of the transaction sector.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 35322.

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Date of creation: 08 May 2008
Date of revision: 09 Dec 2011
Handle: RePEc:pra:mprapa:35322

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Keywords: social capital; development; transaction costs; networks;

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  1. Mark Aguiar & Erik Hurst, 2006. "Measuring trends in leisure: the allocation of time over five decades," Working Papers, Federal Reserve Bank of Boston 06-2, Federal Reserve Bank of Boston.
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  13. Greif, Avner, 1994. "Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 102(5), pages 912-50, October.
  14. Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, Econometric Society, vol. 68(5), pages 1181-1230, September.
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  16. Valerie A. Ramey & Neville Francis, 2006. "A Century of Work and Leisure," NBER Working Papers 12264, National Bureau of Economic Research, Inc.
  17. Routledge, Bryan R. & von Amsberg, Joachim, 2003. "Social capital and growth," Journal of Monetary Economics, Elsevier, Elsevier, vol. 50(1), pages 167-193, January.
  18. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2008. "Alfred Marshall Lecture Social Capital as Good Culture," Journal of the European Economic Association, MIT Press, MIT Press, vol. 6(2-3), pages 295-320, 04-05.
  19. Joel Sobel, 2002. "Can We Trust Social Capital?," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 139-154, March.
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