Social Capital, Government Expenditures, and Growth

Giacomo Ponzetto
Authors registered in the RePEc Author Service: Ugo antonio Troiano

No 9891, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper shows that social capital increases economic growth by raising government investment in human capital. We present a model of stochastic endogenous growth with imperfect political agency. Only some people correctly anticipate the future returns to current spending on public education. Greater social diffusion of information makes this knowledge more widespread among voters. As a result, we find it alleviates myopic political incentives to underinvest in human capital, and it helps the selection of politicians that ensure high productivity in public education. Through this mechanism, we show that social capital raises the equilibrium growth rate of output and reduces its volatility. We provide evidence consistent with the predictions of our model. Individuals with higher social capital are more informed about their government. Countries with higher social capital spend a higher share of output on public education.

Keywords: Economic growth; Education expenditures; Elections; Government expenditures; Imperfect information; Social capital (search for similar items in EconPapers)
JEL-codes: D72 D83 H52 I22 I25 O43 Z13 (search for similar items in EconPapers)
Date: 2014-03
New Economics Papers: this item is included in nep-cdm, nep-fdg, nep-gro and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Social capital, government expenditures, and growth (2024)
Working Paper: Social Capital, Government Expenditures and Growth (2018)
Working Paper: Social Capital, Government Expenditures, and Growth (2015)
Working Paper: Social Capital, Government Expenditures, and Growth (2012)
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