Obsolescence and Decline of Social Capital

20 Pages Posted: 20 May 2004

See all articles by Luis F. Araujo

Luis F. Araujo

Michigan State University - Department of Economics

Raoul Minetti

Michigan State University - Department of Economics

Date Written: May 2004

Abstract

This paper formalizes a theory of the obsolescence and decline of social capital based on the interplay between social capital and the flexibility of productive resources. In our economy, agents with specific skills are held up by their principals. Inside communities, agents learn about each other and thereby engage in mutual aid, preventing the hold-up. As agents learn about each other, they share skills and gain flexibility. In the long run, this may render mutual aid obsolete, causing its decline.

Suggested Citation

Araujo, Luis Fernando and Minetti, Raoul, Obsolescence and Decline of Social Capital (May 2004). Available at SSRN: https://ssrn.com/abstract=548386 or http://dx.doi.org/10.2139/ssrn.548386

Luis Fernando Araujo

Michigan State University - Department of Economics ( email )

101 Marshall Hall
East Lansing, MI 48824
United States
517-355-7583 (Phone)
517-432-1068 (Fax)

Raoul Minetti (Contact Author)

Michigan State University - Department of Economics ( email )

101 Marshall Hall
East Lansing, MI 48824
United States
517-355-7349 (Phone)
517-432-1068 (Fax)

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