Social Capital and Metropolitan Economic Development

37 Pages Posted: 18 Jan 2014

See all articles by Trent Engbers

Trent Engbers

University of Southern Indiana

Barry Rubin

Indiana University Bloomington - School of Public and Environmental Affairs

Craig Aubuchon

Analysis Group, Inc.

Date Written: December 13, 2013

Abstract

Proponents of social capital theory have long argued that it is not only in the best interest of civic life to build social capital but that social capital is vital for the economic health of communities. Yet past studies have failed to distinguish among different types of social capital and relied on inaccurate measures of economic health. This study reexamines what has become conventional wisdom by analyzing the social capital of American metropolitan areas and its impact on economic wellbeing. It improves upon past studies by examining different types of social capital (i.e. trust, group membership, social networks) and substituting the change in competitive advantage jobs from shift-share analysis for total job growth in addition to traditional economic development measures of wealth creation.

To the best of our knowledge, this is the first study to empirically test, and find significant, the long hypothesized importance of social capital in job creation at the level of the metropolitan economy. The study finds that bridging social capital positively impacts the economic welfare of communities with respect to job creation. The effect on job creation is substantial and equal to or exceeds that of many traditional factors related to urban economic growth. However, neither bridging nor bonding social capital is found to have an effect on per capita income change. Practitioners who attempt to create jobs through strategic planning, local public policy and economic development programs should incorporate bridging social capital to maximize the potential for success.

Keywords: urban economic development, social capital, regional economics

JEL Classification: J24, O10, O11, O18, O21, O47

Suggested Citation

Engbers, Trent and Rubin, Barry and Aubuchon, Craig, Social Capital and Metropolitan Economic Development (December 13, 2013). Available at SSRN: https://ssrn.com/abstract=2379037 or http://dx.doi.org/10.2139/ssrn.2379037

Trent Engbers

University of Southern Indiana ( email )

8600 University Boulevard
Evansville, IN 47712
United States

Barry Rubin (Contact Author)

Indiana University Bloomington - School of Public and Environmental Affairs ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States

Craig Aubuchon

Analysis Group, Inc. ( email )

111 Huntington Ave
Boston, MA 02199
United States
617-425-8000 (Phone)

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