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Social Capital and the Reproduction of Inequality in Socially Polarized Economies

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  • Mogues, Tewodaj
  • Carter, Michael R.

Abstract

This paper explores the idea that how wealth is distributed across social groups (ethnic or language groups, gender, etc.) fundamentally affects the evolution of economic inequality. By providing microfoundations suitable for this exploration, this paper hopes to enhance our understanding of when social forces contribute to the reproduction of economic inequality. In tackling this issue, this paper offers contributions in two domains. First, it models social capital as a real capital asset with direct use and collateral value. Second, it extends the concepts of identity, alienation and polarization used by Esteban and Ray (1994). This generalization permits us to consider the multiple characteristics that shape social identity, inclusion and exclusion. It also underwrites a higher-order measure of socio-economic polarization that permits us to explore the hypothesis that economic inequality is most pernicious and persistent when it is socially embedded. Among other things we are able to show that holding constant the initial levels of economic polarization and wealth inequality, higher socio-economic polarization increases subsequent income and wealth inequality. Far from being a distributionally neutral panacea for missing markets, social capital in this model may itself generate exclusion and deepen social and economic cleavages.

Suggested Citation

  • Mogues, Tewodaj & Carter, Michael R., 2004. "Social Capital and the Reproduction of Inequality in Socially Polarized Economies," Staff Papers 12590, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    • Handle: RePEc:ags:wisagr:12590
    DOI: 10.22004/ag.econ.12590
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    References listed on IDEAS

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    Cited by:

    1. Cole R. Gustafson & William E. Nganje, 2006. "Value of Social Capital to Mid‐Sized Northern Plains Farms," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 54(3), pages 421-438, September.
    2. Gustafson, Cole R., 2004. "Value Of Social Capital To Mid-Sized Northern Plains Farms," Staff Papers 23677, North Dakota State University, Department of Agribusiness and Applied Economics.
    3. Carter, Michael R. & Little, Peter D. & Mogues, Tewodaj & Negatu, Workneh, 2005. "Shocks, Sensitivity and Resilience: Tracking the Economic Impacts of Environmental Disaster on Assets in Ethiopia and Honduras," Staff Papers 12648, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.

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