The Compensating Income Variation of Social Capital

33 Pages Posted: 16 Jan 2007

See all articles by Wim Groot

Wim Groot

Maastricht University; University of Amsterdam

Henriette Maassen van den Brink

University of Amsterdam

B.M.S. van Praag

University of Amsterdam - Faculty of Economics and Business (FEB); IZA Institute of Labor Economics; Tinbergen Institute in Amsterdam; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: January 2007

Abstract

There is a small but growing literature on the determinants of social capital. Most of these studies use a measure of trust to define social capital empirically. In this paper we use three different measures of social capital: the size of the individual's social network, the extent of their social safety net and membership of unions or associations. A second contribution to the literature is that we analyze what social capital contributes to our well-being. Based on this, we calculate the compensating income variation of social capital. We find differences in social capital when we differentiate according to individual characteristics such as education, age, place of residence, household composition and health. Household income generally has a statistically significant effect. We find a significant effect of social capital on life satisfaction. Consequently, the compensating income variation of social capital is substantial.

Keywords: life satisfaction, social capital

JEL Classification: D1, D6

Suggested Citation

Groot, Wim and Maassen van den Brink, Henriette and van Praag, Bernard, The Compensating Income Variation of Social Capital (January 2007). IZA Discussion Paper No. 2529, CESifo Working Paper Series No. 1889, Available at SSRN: https://ssrn.com/abstract=957230

Wim Groot

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

University of Amsterdam

Spui 21
Amsterdam, 1018 WB
Netherlands

Henriette Maassen van den Brink

University of Amsterdam ( email )

Spui 21
Amsterdam, 1018 WB
Netherlands
+31 020 525 4311/4288 (Phone)

HOME PAGE: http://www1.fee.uva.nl/scholar/mdw/hmvdb/main.htm

Bernard Van Praag (Contact Author)

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
31 20 5256018 (Phone)
31 20 5256013 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Tinbergen Institute in Amsterdam

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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