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When sociable workers pay off: Can firms internalize social capital externalities?

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  • Ferreira-Lopes, Alexandra
  • Roseta-Palma, Catarina
  • Sequeira, Tiago Neves

Abstract

We use an endogenous growth model to contrast the socially optimal allocation of human capital with the decentralized solution, in a context where workers make the choices that determine social capital accumulation. As social capital is expected to increase productivity but is not traded in markets, a positive social capital externality is identified. We discuss the possibility that, in response to this externality, firms subsidize social capital accumulation activities, incurring into additional costs that are recouped through productivity gains. This reaction by firms may be seen as a justification for some corporate social responsibility actions targeted at workers, although a full internalization of the externality does not look achievable in practice.

Suggested Citation

  • Ferreira-Lopes, Alexandra & Roseta-Palma, Catarina & Sequeira, Tiago Neves, 2012. "When sociable workers pay off: Can firms internalize social capital externalities?," Structural Change and Economic Dynamics, Elsevier, vol. 23(2), pages 127-136.
    • Handle: RePEc:eee:streco:v:23:y:2012:i:2:p:127-136
    DOI: 10.1016/j.strueco.2012.01.004
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    Cited by:

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    3. Mohammad Salahuddin & Khorshed Alam & Lorelle Burton, 2016. "Does Internet Usage Stimulate the Accumulation of Social Capital? A Panel nvestigation for Organization of Economic Cooperation and Development Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 6(1), pages 347-353.

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    More about this item

    Keywords

    Corporate social responsibility; Social capital; Human capital; Economic growth;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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