A cross-country analysis of the relationship between income inequality and social capital

Hans Heijke () and M. Ioakimidis

No 3, ROA Technical Report from Maastricht University, Research Centre for Education and the Labour Market (ROA)

Abstract: This study investigated whether earnings inequality is associated with social capital as measured by active membership in organizations and interpersonal trust. Pearson product-moment correlation analysis showed that greater earnings inequality was associated with lower values on both measures of social capital in 14 European countries. While causality in either direction cannot be inferred from this result, it does suggest the possibility that earnings inequality negatively affects social capital. To test this idea further, we also tentatively examined whether other societal indicators related to earnings inequality are associated with social capital. These alternative indicators—the country’s percentage of urban residents, percentage of residents with tertiary education, and government spending as a percentage of GDP—did not show stronger relationships with social capital than did earnings inequality. Further analysis of the data by excluding specific groups of countries indicated little association between earnings inequality and measures of social capital. These results suggested that country-specific economic or cultural values play a large role in how earnings inequality and social capital are related.

Date: 2013-01-01
New Economics Papers: this item is included in nep-cwa, nep-eur, nep-pbe and nep-soc
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:unm:umarot:2013003

DOI: 10.26481/umarot.2013003

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