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Social Capital, Inequality, and Economic Growth

  • Stefan Dietrich Josten
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    This paper analyzes a heterogeneous-agents OLG model incorporating both endogenous growth and social capital. An individual can either become an active part of the society's networks of trust and mutual cooperation, thus making a positive contribution to overall social capital, or stay socially disintegrated and free-ride on the community's social capital. In the modelled economy, aggregate output and economy-wide human capital and consumption all grow at the average rate of individual human-capital accumulation. An increase in inequality depresses the community's social capital, which in turn lowers the economy's growth rate.

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    Article provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.

    Volume (Year): 160 (2004)
    Issue (Month): 4 (December)
    Pages: 663-

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    Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200412)160:4_663:sciaeg_2.0.tx_2-u
    Contact details of provider: Web page: http://www.mohr.de/jite

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    1. Abhijit V. Banerjee & Andrew F. Newman, 1990. "Occupational Choice and the Process of Development," Discussion Papers 911, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    2. Garcia-Penalosa, Cecilia & Aghion, Philippe & Caroli, Eve, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Economics Papers from University Paris Dauphine 123456789/10091, Paris Dauphine University.
    3. Galor, Oded & Zeira, Joseph, 1988. "Income Distribution and Macroeconomics," MPRA Paper 51644, University Library of Munich, Germany, revised 01 Sep 1989.
    4. Perotti, Roberto & Alesina, Alberto, 1996. "Income Distribution, Political Instability, and Investment," Scholarly Articles 4553018, Harvard University Department of Economics.
    5. Gradstein, Mark & Justman, Moshe, 2000. "Human capital, social capital, and public schooling," European Economic Review, Elsevier, vol. 44(4-6), pages 879-890, May.
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