The impact of social capital on consumption insurance and income volatility in U.K.: evidence from british household panel survey

Pericoli, Filippo M. and Pierucci, Eleonora and Ventura, Luigi (2012): The impact of social capital on consumption insurance and income volatility in U.K.: evidence from british household panel survey.

Abstract

On BHPS data we measure various indices of social capital at the individual and household level, and use them as explanatory variables in standard consumption insurance tests. We find that two out of three aspects of social capital positively impact on consumption smoothing, by reducing the sensitivity of idiosyncratic consumption to idiosyncratic income, both in the long and in the short run. Such effects, however, turn out to be more pronounced in the long run. Further confirmation of the positive impact of social capital on insurance opportunities are derived from an income smoothing exercise, as well as from a Poisson and a Logit analysis on the occurrence of unemployment spells.

• Item Type: MPRA Paper
• Language: English
• Keywords: consumption insurance; social capital; income volatility; item response theory
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D80 - General; A - General Economics and Teaching > A1 - General Economics > A14 - Sociology of Economics

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