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The Compensating Income Variation of Social Capital

  • Wim Groot
  • Henriette Maassen van den Brink
  • Bernard M.S. van Praag

There is a small but growing literature on the determinants of social capital. Most of these studies use a measure of trust to define social capital empirically. In this paper we use three different measures of social capital: the size of the individual’s social network, the extent of their social safety net and membership of unions or associations. A second contribution to the literature is that we analyze what social capital contributes to our well-being. Based on this, we calculate the compensating income variation of social capital. We find differences in social capital when we differentiate according to individual characteristics such as education, age, place of residence, household composition, and health. Household income generally has a statistically significant effect. We find a significant effect of social capital on life satisfaction. Consequently, the compensating income variation of social capital is substantial.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1889.

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Date of creation: 2007
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Handle: RePEc:ces:ceswps:_1889
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  1. Steven N. Durlauf & Marcel Fafchamps, 2004. "Social Capital," CSAE Working Paper Series 2004-14, Centre for the Study of African Economies, University of Oxford.
    • Durlauf, Steven N. & Fafchamps, Marcel, 2005. "Social Capital," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 26, pages 1639-1699 Elsevier.
  2. Edward L. Glaeser & David Laibson & Jose A. Scheinkman & Christine L. Soutter, 1999. "What is Social Capital? The Determinants of Trust and Trustworthiness," NBER Working Papers 7216, National Bureau of Economic Research, Inc.
  3. Alberto Alesina & Eliana La Ferrara, 2000. "The Determinants of Trust," NBER Working Papers 7621, National Bureau of Economic Research, Inc.
  4. Durlauf,S.N., 2000. "Bowling alone : a review essay," Working papers 29, Wisconsin Madison - Social Systems.
  5. repec:oup:qjecon:v:112:y:1997:i:4:p:1251-88 is not listed on IDEAS
  6. John F. Helliwell & Robert D. Putnam, 1999. "Education and Social Capital," NBER Working Papers 7121, National Bureau of Economic Research, Inc.
  7. Joel Sobel, 2002. "Can We Trust Social Capital?," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 139-154, March.
  8. Cameron McIntosh, 2001. "Report on the Construct Validity of the Temporal Satisfaction With Life Scale," Social Indicators Research, Springer, vol. 54(1), pages 37-56, April.
  9. Wim Groot & Henriëtte van den Brink, 2003. "Sympathy and the Value of Health: The Spill-over Effects of Migraine on Household Well-being," Social Indicators Research, Springer, vol. 61(1), pages 97-120, January.
  10. Edward L. Glaeser & David Laibson & Bruce Sacerdote, 2001. "The Economic Approach to Social Capital," Harvard Institute of Economic Research Working Papers 1916, Harvard - Institute of Economic Research.
  11. van Praag, B. M. S. & Frijters, P. & Ferrer-i-Carbonell, A., 2003. "The anatomy of subjective well-being," Journal of Economic Behavior & Organization, Elsevier, vol. 51(1), pages 29-49, May.
  12. Ed Diener & Eunkook Suh, 1997. "Measuring Quality Of Life: Economic, Social, And Subjective Indicators," Social Indicators Research, Springer, vol. 40(1), pages 189-216, January.
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