A Study on the Relationship between Social Policy and Social Capital: Evidence from Asian Countries

There are two competing hypotheses regarding the relationship between social policy and social capital. The crowding-out hypothesis suggests that public resources allocated through social policies and programs eradicate various forms of social capital such as trust, social network and norms. The crowding-in hypothesis, on the contrary, emphasizes virtuous cycles between social policy and social capital. Empirical evidence, mostly conducted for Western countries with advanced economies, has not produced consistent findings regarding the relationship. This study empirically tested these hypotheses based on data from 24 Asian countries. This study further explored how relationships between social policy and social capital vary by sub-regions of Asian countries. Findings from both macro- and micro-level analysis suggest that social policy influences social capital differently according to the forms of social capital. There also seems to be heterogeneity across sub-regions in the relationship between social policy and social capital. Theoretical and policy implications as well as future research directions were further discussed.