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

Alexandra Lopes (), Catarina Roseta-Palma and Tiago Sequeira

Structural Change and Economic Dynamics, 2012, vol. 23, issue 2, 127-136

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.

Keywords: Corporate social responsibility; Social capital; Human capital; Economic growth (search for similar items in EconPapers)
JEL-codes: M14 O15 O41 Z13 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:23:y:2012:i:2:p:127-136

DOI: 10.1016/j.strueco.2012.01.004

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