Social ties and economic development

Anjos, Fernando and Anchorena, Jose (2008): Social ties and economic development.

Abstract

We develop a parsimonious general equilibrium model where agents allocate time across three activities: production, trade, and leisure. Leisure includes time spent socializing, which economizes transaction costs. Our framework yields multiple equilibria in terms of the number of social ties and predicts that the number of social ties is positively associated with development, a relationship we observe in cross-country data. The model captures additional dimensions of data, namely: (i) increasing income inequality, but converging growth rates; (ii) an association between weak social ties and development; and (iii) an association between number of social ties and size of the transaction sector.

• Item Type: MPRA Paper
• Language: English
• Keywords: social capital; development; transaction costs; networks
• Subjects: D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior ; Transaction Costs ; Property Rights; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory

References

Aguiar, Mark, and Erik Hurst, 2007, Measuring trends in leisure: the allocation of time over five decades, Quarterly Journal of Economics 122, 969-1006.

Alesina, Alberto, and Paola Giuliano, 2009, Family ties and political participation, working paper.

Arrow, Kenneth J., 2000, Observations on Social Capital, chapter in Social Capital: A Multifaceted Perspective (The World Bank).

Bala, Venkatesh, and Sanjeev Goyal, 2000, A noncooperative model of network formation, Econometrica 68, 1181-1229.

Berg, Joyce, John Dickhaut, and Kevin McCabe, 1995, Trust, reciprocity, and social history, Games and Economic Behavior 10, 122-142.

Cole, Harold L., George J. Mailath, and Andrew Postlewaite, 1992, Social norms, savings behavior, and growth, Journal of Political Economy 100, 1092-1125.

Coleman, James S., 1988, Social capital in the creation of human capital, American Journal of Sociology 94, 95-120.

Dixit, Avinash K., and Joseph E. Stiglitz, 1977, Monopolistic competition and optimum product diversity, American Economic Review 67, 297-308.

Durlauf, Steven N., and Marcel Fafchamps, 2005, Social capital, chapter in Handbook of Economic Growth (Elsevier).

Francois, Patrick, and Jan Zabojnik, 2005, Trust, social capital, and economic development, Journal of the European Economic Association 3, 51-94.

Garcia, L.B., and W.I. Zangwill, 1982, Pathways to Solutions, Fixed Points, and Equilibria (Prentice-Hall).

Glaeser, Edward L., David Laibson, and Bruce Sacerdote, 2002, An economic approach to social capital, The Economic Journal 112, F437-F458.

Greif, Avner, 1994, Cultural beliefs and the organization of society: A historical and theoretical reflection on collectivist and individualist societies, Journal of Political Economy 102, 912-950.

Guiso, Luigi, Paola Sapienza, and Luigi Zingales, 2008, Social capital as good culture, Journal of the European Economic Association 6, 295-320.

Jackson, Matthew O., and Asher Wolinski, 1996, A strategic model of social and economic networks, Journal of Economic Theory 71, 44-74.

Knack, Stephen, and Philip Keefer, 1997, Does social capital have a payoff? A cross-country investigation, Quarterly Journal of Economics 112, 1251-1288.

Krugman, Paul, 1991, History versus expectations, Quarterly Journal of Economics 106, 651-667.

Kumar, Krishna B., and John G. Matsusaka, 2009, From families to formal contracts: An approach to development, Journal of Development Economics 90, 106-119.

LaPorta, Rafael, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert W. Vishny, 1997, Trust in large organizations, American Economic Review Papers and Proceedings 87, 333-338.

Lucas, Robert E., 2002, Lectures on Economic Growth (Harvard University Press).

Putnam, Robert D., 1993, Making Democracy Work: Civic Traditions in Modern Italy (Princeton University Press).

Putnam, Robert D., 2000, Bowling Alone; The Collapse and Revival of American Community (Simon & Schuster).

Ramey, Valerie, and Neville Francis, 2009, A century of work and leisure, American Economic Journal: Macroeconomics 1, 189-224.

Robinson, John P., and Geoffrey Godbey, 1997, Time for Life: The Surprising Ways Americans Use Their Time (The Pennsylvania State University Press).

Routledge, Bryan, and Joachim von Amsberg, 2003, Social capital and growth, Journal of Monetary Economics 50, 167-193.

Sobel, Joel, 2002, Can we trust social capital?, Journal of Economic Literature 40, 139-154.

Solow, Robert M., 2000, Notes on Social Capital and Economic Performance, chapter in Social Capital: A Multifaceted Perspective (The World Bank).

Tabellini, Guido, 2008, The scope of cooperation: Values and incentives, Quarterly Journal of Economics 123, 905-950.

Wallis, John Joseph, and Douglas C. North, 1986, Measuring the transaction sector in the American economy, 1870-1970, chapter in Long-Term Factors in American Economic Growth (University of Chicago Press).