Decentralization, Social Capital and Regional Convergence

31 Pages Posted: 22 Jun 2013  

Luciano Mauro

University of Trieste - Department of Economics and Statistics

Francesco Pigliaru

University of Cagliari and CRENoS

Date Written: May 20, 2013

Abstract

By studying the interaction between social capital and decentralization, we show that political decentralization can be a source of divergence across heterogeneous regions. In particular, we claim that since the local endowments of social capital display their effect on the economy mainly through the functioning of local institutions, decentralization enhances (hampers) growth wherever social capital is high (low). We define our hypothesis within a growth model with public capital, and use the North-South divide in Italy to assess the quantitative plausibility of our model. A calibration exercise shows that it accounts for the major swings in the Italian regional divide since 1861.

Keywords: Social Capital, Convergence, Economic Growth

JEL Classification: O4, N9, R5

Suggested Citation

Mauro, Luciano and Pigliaru, Francesco, Decentralization, Social Capital and Regional Convergence (May 20, 2013). FEEM Working Paper No. 57.2013. Available at SSRN: https://ssrn.com/abstract=2283079 or http://dx.doi.org/10.2139/ssrn.2283079

Luciano Mauro

University of Trieste - Department of Economics and Statistics ( email )

Piazzale Europa 1
Trieste, Trieste 34100
Italy

Francesco Pigliaru (Contact Author)

University of Cagliari and CRENoS ( email )

Viale S. Ignazio, 78
Cagliari I-09123
Italy
070-6753818 (Phone)
070-6753760 (Fax)

HOME PAGE: http://francescopigliaru@blogspot.com

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