Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/223855
Authors: 
Hellerstein, Judith K.
Neumark, David
Year of Publication: 
2020
Series/Report no.: 
IZA Discussion Papers No. 13413
Abstract: 
One definition of social capital is the "networks of relationships among people who live and work in a particular society, enabling that society to function effectively". This definition of social capital highlights two key features. First, it refers to connections between people, shifting our focus from characteristics of individuals and families to the ties between them. Second, it emphasizes that social capital is present not simply because individuals are connected, but rather when these network relationships lead to productive social outcomes. In that sense, social capital is productive capital, in the same way that economists think of physical capital or human capital as productive capital. Social capital, under this definition, is still very broad. Networks can be formed along many dimensions of society in which people interact – neighborhoods, workplaces, extended families, schools, etc. We focus on networks whose existence fosters social capital in one specific way: by facilitating the transfer of information that helps improve the economic wellbeing of network members, especially via better labor market outcomes. We review evidence showing that networks play this important role in labor market outcomes, as well as in other outcomes related to economic wellbeing, paying particular attention to evidence of how networks can help less-skilled individuals. We also discuss the measurement of social capital, including new empirical methods in machine learning that might provide new evidence on the underlying connections that do – or might – lead to productive networks. Throughout, we discuss the policy implications of what we know so far about networks and social capital.
Subjects: 
social capital
networks
JEL: 
J1
J8
Document Type: 
Working Paper

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