The Fragility of Social Capital

33 Pages Posted: 4 May 2009

See all articles by Fabio Sabatini

Fabio Sabatini

Sapienza University of Rome - Department of Economics and Law; Euricse

Angelo Antoci

University of Sassari

Mauro Sodini

Dipartimento di Statistica e Matematica Applicata all’Economia, Università di Pisa

Date Written: April 30, 2009

Abstract

This paper addresses two hot topics of the contemporary debate, social capital and economic growth. Our theoretical analysis sheds light on decisive but so far neglected issues: how does social capital accumulate over time; Which is the relationship between social capital, technical progress and economic growth in the long run; The analysis shows that the economy may be attracted by alternative steady states, depending on the initial social capital endowments and cultural exogenous parameters representing the relevance of social interaction and trust in well-being and production. When material consumption and relational goods are substitutable, the choice to devote more and more time to private activities may lead the economy to a “social poverty trap”, where the cooling of human relations causes a progressive destruction of the entire stock of social capital. In this case, the relationship of social capital with technical progress is described by an inverted U-shaped curve. However, the possibility exists for the economy to follow a virtuous trajectory where the stock of social capital endogenously and unboundedly grows. Such result may follow from a range of particular conditions, under which the economy behaves as if there was no substitutability between relational activities and material consumption.

Keywords: Economic Growth, Technical Progress, Social Interactions, Social Capital

JEL Classification: A13, D03, O43, Z13

Suggested Citation

Sabatini, Fabio and Antoci, Angelo and Sodini, Mauro, The Fragility of Social Capital (April 30, 2009). FEEM Working Paper No. 16.2009, Available at SSRN: https://ssrn.com/abstract=1397102 or http://dx.doi.org/10.2139/ssrn.1397102

Fabio Sabatini (Contact Author)

Sapienza University of Rome - Department of Economics and Law ( email )

Piazzale Aldo Moro 5
Roma, Rome 00185
Italy

Euricse ( email )

Via S. Giovanni 36
38122 Trento (TN)
Italy

Angelo Antoci

University of Sassari ( email )

Piazza Universita
Sassari, 07100
Italy

Mauro Sodini

Dipartimento di Statistica e Matematica Applicata all’Economia, Università di Pisa ( email )

Piazza Arbarello, 8
Turin, I-10122
Italy

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