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Social capital and the reproduction of economic inequality in polarized societies

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  • Tewodaj Mogues
  • Michael Carter
Abstract
This paper explores the idea of how wealth is distributed across social groups (ethnic or language groups, gender, etc.) and how such distribution fundamentally affects the evolution of economic inequality. By providing microfoundations suitable for this exploration, the paper hopes to enhance the understanding of when social forces contribute to the reproduction of economic inequality. In tackling this issue, the paper offers contributions in two domains. First, it models social capital as a real capital asset with direct use and collateral value. Second, it extends the concepts of identity, alienation and polarization used by Esteban and Ray (1994). This generalization permits consideration of the multiple characteristics that shape social identity, inclusion and exclusion. It also underwrites a higher-order measure of socioeconomic polarization that permits exploration of the hypothesis that economic inequality is most pernicious and persistent when it is socially embedded. Among other things the paper shows that holding constant the initial levels of economic polarization and wealth inequality, higher socioeconomic polarization increases subsequent income and wealth inequality. Far from being a distributionally neutral panacea for missing markets, social capital in this model may itself generate exclusion and deepen social and economic cleavages.
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  • Tewodaj Mogues & Michael Carter, 2005. "Social capital and the reproduction of economic inequality in polarized societies," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 3(3), pages 193-219, December.
    • Handle: RePEc:kap:jecinq:v:3:y:2005:i:3:p:193-219
    DOI: 10.1007/s10888-005-9001-9
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    1. Mogues, Tewodaj, 2008. "A two-dimensional measure of polarization:," IFPRI discussion papers 837, International Food Policy Research Institute (IFPRI).
    2. Michael Carter & Peter Little & Tewodaj Mogues & Workneh Negatu, 2005. "Shocks, Sensitivity and Resilience: Tracking the Economic Impacts of Environmental Disaster on Assets in Ethiopia and Honduras," Development and Comp Systems 0511029, University Library of Munich, Germany.
    3. Chani, Muhammad Irfan & Hassan, Mahboob Ul & Shahid, Muhammad, 2012. "Human capital formation and economic development in Pakistan: an empirical analysis," MPRA Paper 38925, University Library of Munich, Germany.
    4. Carter, Michael R. & Little, Peter D. & Mogues, Tewodaj & Negatu, Workneh, 2007. "Poverty Traps and Natural Disasters in Ethiopia and Honduras," World Development, Elsevier, vol. 35(5), pages 835-856, May.
    5. Christopher B. Barrett & Michael R. Carter & Jean-Paul Chavas, 2017. "Introduction to "The Economics of Poverty Traps"," NBER Chapters, in: The Economics of Poverty Traps, pages 1-20, National Bureau of Economic Research, Inc.
    6. Ghosh, sudeshna, 2017. "Education Attainment Forecasting and Economic Inequality United States," MPRA Paper 89712, University Library of Munich, Germany.
    7. Sommarat Chantarat & Christopher Barrett, 2012. "Social network capital, economic mobility and poverty traps," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 10(3), pages 299-342, September.
    8. Dinda, Soumyananda, 2008. "Social capital in the creation of human capital and economic growth: A productive consumption approach," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(5), pages 2020-2033, October.
    9. Dinda, Soumyananda, 2016. "Interrelationships between Social and human Capital, and Economic Growth," MPRA Paper 89646, University Library of Munich, Germany, revised 2017.
    10. Muhammad Chani & Sajjad Jan & Zahid Pervaiz & Amatul Chaudhary, 2014. "Human capital inequality and income inequality: testing for causality," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(1), pages 149-156, January.
    11. Mao, Hui & Chai, Yujia & Shao, Xiaoxuan & Chang, Xue, 2024. "Digital extension and farmers' adoption of climate adaptation technology: An empirical analysis of China," Land Use Policy, Elsevier, vol. 143(C).
    12. Tewodaj Mogues, 2005. "Shocks, Livestock Asset Dynamics, and Social Capital in Ethiopia," Development and Comp Systems 0512006, University Library of Munich, Germany.
    13. Edgar J. Sánchez Carrera & Elena Gubar & Andrey F. Oleynik, 2019. "Network Structures and Poverty Traps," Dynamic Games and Applications, Springer, vol. 9(1), pages 236-253, March.
    14. Kagin, Justin D. & Lybbert, Travis J., 2023. "Religiosity and educational attainment among the Roma: Shedding an oppositional identity?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 107(C).
    15. Gangadharan, Lata & Grossman, Philip J. & Molle, Mana Komai & Vecci, Joe, 2019. "Impact of social identity and inequality on antisocial behaviour," European Economic Review, Elsevier, vol. 119(C), pages 199-215.
    16. Michael R. Carter & Marco Castillo, 2011. "Trustworthiness and Social Capital in South Africa: Analysis of Actual Living Standards Data and Artifactual Field Experiments," Economic Development and Cultural Change, University of Chicago Press, vol. 59(4), pages 695-722.
    17. Santos, Paulo & Barrett, Christopher B., 2006. "Informal Insurance in the Presence of Poverty Traps: Evidence from Southern Ethiopia," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25487, International Association of Agricultural Economists.
    18. Ronelle Burger & Marisa Coetzee & Carina van der Watt, 2013. "Estimating the benefits of linking ties in a deeply divided society: considering the relationship between domestic workers and their employers in South Africa," Working Papers 18/2013, Stellenbosch University, Department of Economics.
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