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How Can the Decline in Social Capital be Reconciled with a Satisfactory Growth Performance?


  • Stefano Bartolini


  • Luigi Bonatti



We aim at reconciling Putnam’s claim that social capital has declined in the U.S. in the last decades with the satisfactory growth performance of the U.S. economy over the same period. This puzzle originates from the fact that most literature on social capital emphasizes its role in enhancing factor productivity (mainly by reducing transaction costs). We model the hypotheses that the expansion of market activities (increased “marketization”) weakens social capital formation, and that firms utilize more market services in response to the declining social capital. Within this framework, perpetual growth can be consistent with the progressive erosion of social capital.

Suggested Citation

  • Stefano Bartolini & Luigi Bonatti, 2006. "How Can the Decline in Social Capital be Reconciled with a Satisfactory Growth Performance?," Department of Economics University of Siena 477, Department of Economics, University of Siena.
  • Handle: RePEc:usi:wpaper:477

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    References listed on IDEAS

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    15. Miguel, Edward A. & Gertler, Paul & Levine, David I., 2003. "Did Industrialization Destroy Social Capital in Indonesia?," Center for International and Development Economics Research, Working Paper Series qt9kt2m860, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
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    Cited by:

    1. Isabel Neira & Emilia Vázquez & Marta Portela, 2009. "An Empirical Analysis of Social Capital and Economic Growth in Europe (1980–2000)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 92(1), pages 111-129, May.
    2. Pugno, Maurizio, 2009. "The Easterlin paradox and the decline of social capital: An integrated explanation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(4), pages 590-600, August.

    More about this item


    Endogenous growth; externalities; marketization; social assets;

    JEL classification:

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

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