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New Housing Supply and the Dilution of Social Capital

  • Christian A. L. Hilber

This paper examines the role of local housing supply conditions for social capital investment. Using an instrumental variables approach and data from the Social Capital Community Benchmark Survey, it is documented that the positive link between homeownership and individual social capital investment is largely confined to more built-up neighborhoods (with more inelastic supply of new housing). The empirical findings provide support for the proposition that in these localities house price capitalization provides additional incentives for homeowners to invest in social capital. The findings are also largely consistent with the proposition that built-up neighborhoods provide protection from inflows of newcomers that could upset a mutually beneficial equilibrium involving reciprocal cooperation. However, the results do not appear to be driven by selection based on inherent differences in social aptitudes or by Tiebout sorting.

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Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0042.

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Date of creation: Jan 2010
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Handle: RePEc:cep:sercdp:0042
Contact details of provider: Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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