Social Capital, Government Expenditures and Growth
Copyright policy )Social Capital, Government Expenditures and Growth
Abstract This paper shows that social capital increases economic growth by raising government investment in human capital through better political incentives and selection. We provide empirical evidence that a greater share of output is spent on public education where social capital is higher, both across countries and across U.S. states. We develop a theoretical model of stochastic endogenous growth with imperfect political agency. Only some people correctly anticipate the future returns to current spending on public education. Greater social diffusion of information makes this knowledge more widespread among voters. As a result, social capital alleviates myopic political incentives to underinvest in human capital. It also helps voters select politicians who ensure high productivity in public education. Through this mechanism, we show that social capital raises the equilibrium growth rate of output and reduces its volatility.
- National Bureau of Economic Research United States
- University of Michigan–Ann Arbor United States
- University of California, Berkely United States
- Universitat Pompeu Fabra Spain
- University of California United States
Elections, government expenditures, Social capital, social capital, education expenditures, economic growth, elections, government expenditures, imperfect information, Social Capital, Education Expenditures, Economic Growth, Elections, Government Expenditures, Imperfect Information, Macroeconomics and International Economics, elections, Economic growth, D72 - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior D83 - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness H52 - Government Expenditures and Education H75 - State and Local Government: Health; Education; Welfare; Public Pensions I22 - Educational Finance; Financial Aid I25 - Education and Economic Development I26 - Returns to Education O43 - Institutions and Growth Z13 - Economic Sociology; Economic Anthropology; Social and Economic Stratification, Imperfect information, Government expenditure, imperfect information, education expenditures, economic growth, Economic Growth; Education Expenditures; Elections; Government Expenditures; Imperfect Information; Social Capital, social capital, Imperfect Information, Education expenditure, jel: jel:Z13, jel: jel:D83, jel: jel:I22, jel: jel:I25, jel: jel:O43, jel: jel:D72, jel: jel:H52
Elections, government expenditures, Social capital, social capital, education expenditures, economic growth, elections, government expenditures, imperfect information, Social Capital, Education Expenditures, Economic Growth, Elections, Government Expenditures, Imperfect Information, Macroeconomics and International Economics, elections, Economic growth, D72 - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior D83 - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness H52 - Government Expenditures and Education H75 - State and Local Government: Health; Education; Welfare; Public Pensions I22 - Educational Finance; Financial Aid I25 - Education and Economic Development I26 - Returns to Education O43 - Institutions and Growth Z13 - Economic Sociology; Economic Anthropology; Social and Economic Stratification, Imperfect information, Government expenditure, imperfect information, education expenditures, economic growth, Economic Growth; Education Expenditures; Elections; Government Expenditures; Imperfect Information; Social Capital, social capital, Imperfect Information, Education expenditure, jel: jel:Z13, jel: jel:D83, jel: jel:I22, jel: jel:I25, jel: jel:O43, jel: jel:D72, jel: jel:H52
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