Social capital formation across space: proximity and trust in European regions

An extensive economics and regional science literature has discussed the importance of social capital for economic growth and development. Yet, what social capital is and how it is formed are elusive issues, which require further investigation. Here, we refer to social capital in terms of civic capital and good culture , as rephrased by Guiso, Sapienza and Zingales (2010) and Tabellini (2010). The accumulation of this kind of capital allows the emerging of regional informal institutions, which may help explaining diff erences in regional development. In this paper, we take a regional perspective and use exploratory space and space-time methods to assess whether geography, via proximity, contributes to the formation of social capital across European regions. In particular, we ask whether generalized trust, a fundamental constituent of social capital and an ingredient of economic development, tends to be clustered across space and over time. From the policy standpoint, the spatial hysteresis of regional trust may contribute to the formation of spatial traps of social capital and act as a further barrier to regional economic development and convergence.

Human capital, social mobility and the skill premium

This paper develops a dynamic general equilibrium model to highlight the role of human capital accumulation of agents differentiated by skill type in the joint determination of social mobility and the skill premium. We first show that our model captures the empirical co-movement of the skill premium, the relative supply of skilled to unskilled workers and aggregate output in the U.S. data from 1970-2000. We next show that endogenous social mobility and human capital accumulation are key channels through which the effects of capital tax cuts and increases in public spending on both pre- and post-college education are transmitted. In particular, social mobility creates additional incentives for the agents which enhance the beneficial effects of policy reforms. Moreover, the dynamics of human capital accumulation imply that, post reform, the skill premium is higher in the short- to medium-run than in the long-run.