Social Capital and its Role in Production: Does the Depletion of Social Capital Depress Economic Growth?
We augment a Solow-Ramsey growth model by including: i) a labor-leisure choice, ii) social capital entering the production functions, iii) negative externalities affecting social capital and increasing with the level of activity, iv) the possibility for economic agents to substitute social capital with produced goods. It is shown that the erosion of social capital may lead to a higher steady-state level of activity. Hence, the possibility of substituting social capital in production functions may generate dynamics whereby agents compensate for negative externalities by increasing their labor supply and accumulation in order to increase the output used to substitute diminishing social capital. By so doing, they contribute further to the decline in social capital, which feeds back into the mechanism that induces agents to increase output. This result is at odds with the literature on social capital, which generally considers the latter to be an important growth-enhancing factor and its erosion as an obstacle to obtaining higher per-capita output.
|Date of creation:||Feb 2004|
|Contact details of provider:|| Postal: Piazza S.Francesco,7 - 53100 Siena|
Web page: http://www.deps.unisi.it/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bartolini, Stefano & Bonatti, Luigi, 2003. "Undesirable growth in a model with capital accumulation and environmental assets," Environment and Development Economics, Cambridge University Press, vol. 8(01), pages 11-30, February.
- Annen, Kurt, 2003. "Social capital, inclusive networks, and economic performance," Journal of Economic Behavior & Organization, Elsevier, vol. 50(4), pages 449-463, April.
- Antoci, Angelo & Bartolini, Stefano, 2004. "Negative externalities, defensive expenditures and labour supply in an evolutionary context," Environment and Development Economics, Cambridge University Press, vol. 9(05), pages 591-612, October.
When requesting a correction, please mention this item's handle: RePEc:usi:wpaper:421. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fabrizio Becatti)
If references are entirely missing, you can add them using this form.