Social Capital in the Creation of Human Capital

Abstract

Introduces and illustrates the concept of social capital, describes its forms, and examines the social structures in which it arises. An application of the concept is used in analyzing high school dropouts. The theory is set in the context of rational action, with sociological and economic explanations (both of which are criticized and revised). Social capital as a resource for action is a way of importing the principle of rational action in the analysis of social systems, including economic systems. Social capital is a particular kind of resource available to an actor. Although not completely fungible, it is productive and makes achievement of ends possible. It inheres in the structure of relations between and among actors. It also shares features with public goods (in that it benefits all who are part of the structure). Social capital is employed in the creation of human capital, which is created by changes in persons that create skills and capabilities that enable them to act in new ways. It is especially important in creating human capital in the next generation. Social capital is one of three components (along with financial capital and human capital) in family background. An application of the concept of social capital is undertaken by examining the effect of its lack in high school sophomores on their drop-out rate. The study draws on the data in the High School and Beyond dataset. Various analyses show that social capital in the family is an educational resource of children, just as are the family's financial and social capital. For example, frequent family moves disrupt the family's social capital, and each move increases the child's dropout rate. Low drop out rates at Catholic and private schools are also indicators of a child's social capital outside the school. (TNM)

Keywords: Rational action, Social norms, Trust relationships, Exchange relationships, Information sharing, Social capital, Human capital, Family networks, High school students, Family background, Social structures