Social Capital in the Presence of Market Failures

Lopez-Rodriguez, Patricia and De la Torre Garcia, Rodolfo (2010): Social Capital in the Presence of Market Failures. Published in: International Journal of Social Inquiry , Vol. Volume, No. especial issue of social capital (2010): pp. 163-188.

Abstract

In Mexico, social capital is used to get resources. People who do not have access to formal markets use their networks to acquire public and financing services, social insurance and social benefits. To test this, social capital indicators were built using the resources supplied by people as a proportion of their income. This measure is theoretically related to a sympathy coefficient that represents the degree to which a person joins another´s welfare in its utility function, leading him to share resources with others. Synthetic panels with population cohorts were elaborated to follow population throughout the time. To correct a spurious regression problem, the cointegration-panel method was used. As a result, variables that reflect failures in financial, health and social insurance markets are associated to bonding and bridging social capital indicators. Thus, adjustments in these markets could be explained by social capital variables additionally to market prices mechanisms.

• Item Type: MPRA Paper
• Language: English
• Keywords: social capital; market failures; equilibrium; relationships; networks.
• Subjects: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L14 - Transactional Relationships ; Contracts and Reputation ; Networks; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty; H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I38 - Government Policy ; Provision and Effects of Welfare Programs; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D52 - Incomplete Markets; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z13 - Economic Sociology ; Economic Anthropology ; Social and Economic Stratification; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D85 - Network Formation and Analysis: Theory

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