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How Can the Decline in Social Capital be Reconciled with a Satisfactory Growth Performance?

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  • Stefano Bartolini

    ()

  • Luigi Bonatti

    ()

Abstract

We aim at reconciling Putnam’s claim that social capital has declined in the U.S. in the last decades with the satisfactory growth performance of the U.S. economy over the same period. This puzzle originates from the fact that most literature on social capital emphasizes its role in enhancing factor productivity (mainly by reducing transaction costs). We model the hypotheses that the expansion of market activities (increased “marketization”) weakens social capital formation, and that firms utilize more market services in response to the declining social capital. Within this framework, perpetual growth can be consistent with the progressive erosion of social capital.

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Bibliographic Info

Paper provided by Department of Economics, University of Siena in its series Department of Economics University of Siena with number 477.

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Date of creation: Apr 2006
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Handle: RePEc:usi:wpaper:477

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Keywords: Endogenous growth; externalities; marketization; social assets;

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Cited by:
  1. Isabel Neira & Emilia Vázquez & Marta Portela, 2009. "An Empirical Analysis of Social Capital and Economic Growth in Europe (1980–2000)," Social Indicators Research, Springer, vol. 92(1), pages 111-129, May.

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