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Endogenous growth, decline in social capital and expansion of market activities

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Listed author(s):
  • Bartolini, Stefano
  • Bonatti, Luigi

Abstract

We model in an endogenous growth set-up the hypotheses that the expansion of market activities weakens social capital formation, and that firms can invest in formal mechanisms of control and enforcement to substitute for social capital (trust, work ethics, honesty). The model shows that the economy tends to grow faster when it is relatively poorer in social capital and that perpetual growth can be consistent with the progressive erosion of social capital. These results may help reconciling Putnam’s claim that social capital has declined in the U.S. with the satisfactory growth performance of the U.S. economy over the same period.

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File URL: https://mpra.ub.uni-muenchen.de/3341/1/MPRA_paper_3341.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 3341.

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Date of creation: May 2007
Handle: RePEc:pra:mprapa:3341
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Keywords: Generalized trust; externalities; marketization; social assets;

Find related papers by JEL classification:

  • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
  • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
  • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
  • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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  1. Zak, Paul J & Knack, Stephen, 2001. "Trust and Growth," Economic Journal, Royal Economic Society, vol. 111(470), pages 295-321, April.
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  10. Durlauf, Steven N., 2002. "Bowling Alone: a review essay," Journal of Economic Behavior & Organization, Elsevier, vol. 47(3), pages 259-273, March.
  11. Jane Kolodinsky & Garret Kimberly & Jonathan Isham, 2003. "The Effects of Volunteering for Non-profit Organizations on Social Capital Formation: Evidence from a Statewide Survey," Middlebury College Working Paper Series 0305, Middlebury College, Department of Economics.
  12. Anil Rupasingha & Stephan J. Goetz & David Freshwater, 2002. "Social and institutional factors as determinants of economic growth: Evidence from the United States counties," Papers in Regional Science, Springer;Regional Science Association International, vol. 81(2), pages 139-155.
  13. repec:hrv:faseco:30726298 is not listed on IDEAS
  14. Yuan K. Chou, 2002. "Modelling Social Capital And Growth," Department of Economics - Working Papers Series 865, The University of Melbourne.
  15. Hirschman, Albert O, 1982. "Rival Interpretations of Market Society: Civilizing, Destructive, or Feeble?," Journal of Economic Literature, American Economic Association, vol. 20(4), pages 1463-1484, December.
  16. Steven N. Durlauf, 2002. "On the Empirics of Social Capital," Economic Journal, Royal Economic Society, vol. 112(483), pages 459-479, November.
  17. Dora L. Costa & Matthew E. Kahn, 2001. "Understanding the Decline in Social Capital, 1952-1998," NBER Working Papers 8295, National Bureau of Economic Research, Inc.
  18. Miguel, Edward & Gertler, Paul & Levine, David I, 2006. "Does Industrialization Build or Destroy Social Networks?," Economic Development and Cultural Change, University of Chicago Press, vol. 54(2), pages 287-317, January.
  19. Richard B. Freeman & Ronald Schettkat, 2005. "Marketization of household production and the EU–US gap in work," Economic Policy, CEPR;CES;MSH, vol. 20(41), pages 6-50, 01.
  20. Sjoerd Beugelsdijk & Henri L.F. de Groot & Anton B.T.M. van Schaik, 2004. "Trust and economic growth: a robustness analysis," Oxford Economic Papers, Oxford University Press, vol. 56(1), pages 118-134, January.
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