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Social Capital, Government Expenditures, and Growth

Giacomo Ponzetto () and Ugo Troiano ()

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

Abstract: We present a tractable stochastic endogenous growth model that explains how social capital influences economic development. In our model, social capital increases citizens' awareness of government activity. Hence, it alleviates the electoral incentives to under-invest in education, whose returns are delayed and less visible to voters. In equilibrium, higher social capital raises the average output growth rate and reduces its volatility by increasing public investment in education while making its returns higher and less variable. Our theory also predicts that a more unequal distribution of social capital reduces public education expenditures. We provide suggestive cross-country evidence consistent with these predictions.

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)
New Economics Papers: this item is included in nep-cdm, nep-fdg, nep-gro and nep-soc
Date: 2014-03
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Related works:
Working Paper: Social Capital, Government Expenditures and Growth (2018) Downloads
Working Paper: Social capital, government expenditures, and growth (2018) Downloads
Working Paper: Social Capital, Government Expenditures, and Growth (2014) Downloads
Working Paper: Social Capital, Government Expenditures, and Growth (2012) Downloads
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