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The Compensating Income Variation of Social Capital

  • Groot, Wim


    (Maastricht University)

  • Maassen van den Brink, Henriette


    (University of Amsterdam)

  • van Praag, Bernard M. S.


    (University of Amsterdam)

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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2529.

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Length: 31 pages
Date of creation: Dec 2006
Date of revision:
Publication status: published in: Social Indicators Research, 2007, 82 (2), 189-207
Handle: RePEc:iza:izadps:dp2529
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  1. John F. Helliwell & Robert D. Putnam, 1999. "Education and Social Capital," NBER Working Papers 7121, National Bureau of Economic Research, Inc.
  2. 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.
  3. Ada Ferrer-i-Carbonell & Bernard M. S. van Praag, 2001. "The Subjective Costs of Health Losses Due to Chronic Diseases: An Alternative Model for Monetary Appraisal," Discussion Papers of DIW Berlin 262, DIW Berlin, German Institute for Economic Research.
  4. Edward L. Glaeser & David Laibson & Bruce Sacerdote, 2000. "The Economic Approach to Social Capital," NBER Working Papers 7728, National Bureau of Economic Research, Inc.
  5. Bernard M.S. van Praag & P. Frijters & A. Ferrer-i-Carbonell, 2002. "The Anatomy of Subjective Well-being," Tinbergen Institute Discussion Papers 02-022/3, Tinbergen Institute.
  6. Cameron McIntosh, 2001. "Report on the Construct Validity of the Temporal Satisfaction With Life Scale," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 54(1), pages 37-56, April.
  7. Edward L. Glaeser & David Laibson & Jose A. Scheinkman & Christine L. Soutter, 1999. "What is Social Capital? The Determinants of Trust and Trustworthiness," Harvard Institute of Economic Research Working Papers 1875, Harvard - Institute of Economic Research.
  8. Durlauf,S.N., 2000. "Bowling alone : a review essay," Working papers 29, Wisconsin Madison - Social Systems.
  9. Joel Sobel, 2002. "Can We Trust Social Capital?," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 139-154, March.
  10. Alberto Alesina & Eliana La Ferrara, 2000. "The Determinants of Trust," NBER Working Papers 7621, National Bureau of Economic Research, Inc.
  11. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1251-1288.
  12. Groot, Wim & Maassen van den Brink, Henriëtte, 2004. "A direct method for estimating the compensating income variation for severe headache and migraine," Social Science & Medicine, Elsevier, vol. 58(2), pages 305-314, January.
  13. 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: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 61(1), pages 97-120, January.
  14. Ed Diener & Eunkook Suh, 1997. "Measuring Quality Of Life: Economic, Social, And Subjective Indicators," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 40(1), pages 189-216, January.
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