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Impact of Social Capital on Income

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  • Anna Grochowska
  • Paweł Strawiński

Abstract

In this paper we attempt to quantify the impact of social capital on income. We follow Putnam’s [1995] approach and we construct a synthetic index for social capital using a multivariate probit model. Social capital is considered as one of the crucial individual endowments, next to physical and human capital. In a second step, we estimate the impact of the synthetically constructed social capital index on an individual’s income using a Mincer-type earnings equation. The results show that social capital explains up to 20% of income variation both at the individual and household level. However, human capital and physical capital remain the critical determinants of individual income.

Suggested Citation

  • Anna Grochowska & Paweł Strawiński, 2012. "Impact of Social Capital on Income," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 31.
    • Handle: RePEc:eko:ekoeko:31_56
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    File URL: http://ekonomia.wne.uw.edu.pl/ekonomia/getFile/351
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    References listed on IDEAS

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