Social capital, industrial districts and regional unemployment in Italy

We consider the industrial districts “conductors” of social capital. Hence, we use the regional density of industrial districts to measure social capital and we analyse its impact on regional unemployment in Italy. By using regional data from the Italian National Statistical Office (ISTAT), we develop a pooled cross-sectional analysis based on the years 2001 and 2005. For a more robust analysis we divide unemployment into two types: general and youth. Interestingly, contrary to the theory of the “strength of position proposition” (Lin 2000), we find that both youth and general unemployment decreases with social capital only within low-educated individuals. In addition, within the low-educated group, empirical evidence shows that the magnitude of the effect of social capital on unemployment increases with the age

Social capital, community governance and credit market

Abstract Financial contracts represent an exchange of financial resources today, such as money, for a promise to return more financial resources tomorrow. The aim of the paper is to test whether cheating or respecting a promise, in particular a “financial one”, is also a matter of community norms in which the individuals are involved. According to the social capital literature, where a community is characterised by a high level of social capital, then a higher level of civic engagement, trustworthiness and self monitoring among its members occur. These elements characterise the so called community governance. By using regional data from Italy, the paper will analyse the association between the community governance, through different aspects of social capital, and credit market variables such as interest rate, credit supply and insolvency rate without and with legal institutional enforcements. Empirical evidence shows that, in absence of legal enforcement, indicators of structural social capital, civic engagement and outcome-based social capital are positively related to better credit market performances. When legal enforcement is included in our models still social capital, through the civic engagement aspect, negatively affects the insolvency rate by confirming our hypothesis of complementarity among community state and market

Social capital: a road map of theoretical frameworks and empirical limitations

The general idea of social capital is that relationships matter. In this sense, trust, cooperation and reciprocity involved in these relationships can have a positive impact on the wealth of the society by reducing transaction costs, facilitating collective actions and lowering opportunistic behaviour. This work sheds light on the different theoretical and empirical problems that a scholar is likely to face in dealing with social capital research and analysis. We propose a critical road map of the social capital theories and applications for a general audience, non-users included, with particular attention to the works of political and social economists. We provide a critical debate on the different definitions and measures produced, the theoretical frameworks developed and the empirical techniques adopted so far in the analysis of the impact of social capital on socio-economic outcomes. We stress on the limitations of these techniques and we suggest some basic strategies to reduce the magnitude of these limitations

A new proxy of social capital and the economic performance across the Italian regions

In the last 20 years, social capital, has been evoked in several field of social science research and used to explain a vast range of phenomena: political participation, institution performance, corruption, economic success of countries and so on. Unfortunately, dealing with social capital at a scientific level presents, at least, three main problems. First social capital’s definition is still elusive, especially due to its multi-dimensional nature. Second, it is a particular form of capital related to a very high level of intangibility. Finally, because of lack of suitable data there is neither a universal measurement method, nor a single underlined indicator commonly accepted by the literature. These are some of the reasons for which social capital measures are considered as proxies. By using the density of workers within industrial districts, we have constructed an alternative proxy to those that already exist in the literature in order to empirically analyse the difference, in terms of economic performance, across the Italian regions. The methodology we have applied to derive the index is identical to that one used to construct the Putnam’s instrument. Empirical evidence shows that our measure does not affect macroeconomic indicators such as investment and income per capita. However, it significantly influences unemployment disparities, and the level of innovation

Social capital, poverty and social exclusion in Italy

The paper investigates whether social capital can affect the standard living of the Italian households based on poverty and social exclusion. The analysis is developed at the regional level through cross-sections based in the year 2002 and in the year 2003. The indices of social capital that we use are the associational activity a la Putnam and a new proxy based on the regional density of industrial districts. By using the empirical model advanced by Grootaert (2001) we find that our results confirm the theory of social capital and poverty transition mechanism advanced by Narayan and Woolcock (2000). Moreover we find significant and negative correlation between social capital and the measures of social exclusion. All these results, drive the paper to the conclusion that social capital is positively correlated to higher level of living standard

Trust and prosocial behaviour in a process of state capacity building: the case of the Palestinian territories

This paper contributes to the literature by conducting the first empirical investigation into the determinants of prosocial behaviour in the Palestinian territories, with a focus on the role of trust and institutions. Drawing on a unique dataset collected through the administration of a questionnaire to a representative sample of the population of the West Bank and the Gaza Strip, we have found that institutional trust is the strongest predictor of prosociality. This result suggests that, in collectivist societies with low levels of generalized trust, the lack of citizens’ confidence in the fairness and efficiency of public institutions may compromise social order. The strengthening of institutional trust may also reinforce prosocial behaviour in individualist societies, where a decline in generalized trust has been documented by empirical studie

Institutional Quality and Illicit Capital Outflow: A Comparative Analysis of the Eastern European Countries

It is estimated that $1 trillion flows out of the developing and emerging economies illegally on a yearly basis. This affects the ability of governments to raise the tax revenue and deprive the citizens of crucial services. Multinational Corporations (MNCs), as one of the big player in the global economy, are suspected to play a role in those capital outflows. For the multinational, the outflows enable strategic allocation pf taxes as a mean to enhance profits. This study tests whether institutional quality and tax level are significant predictors of the illicit capital outflow. The analysis uses panel data regressions on a group of Eastern European countries for the years 2004-2013. Empirical evidence suggests that illicit capital outflow reduces with institutional quality and increases with the tax level. We speculate on the importance of cross-country coordination actions to improve the quality of the institutions not only domestically but also at the supranational level

Introduction to the special issue on institutions and culture in economic contexts

The need of further research on the interlink between culture and institutions has been strongly advocated by economists and institutionalists alike. However, bringing together culture and institutions within an organic framework, though, is a non-trivial operation. This is due to the complexity of the synergies between cultural aspects and institutional devices. This special issue attempts to start filling this gap and to build an ad-hoc systemic platform for disseminating such a debate. To this purpose, it brings together an organic collection of contributions in well-established conceptualisations of both culture and institutions, supported by robust and consistent methodological applications. The essays presented in this work provide consistent evidence and conceptual perspectives supporting the idea that the synergies between cultural and institutional aspects are of paramount importance to understand human behaviour, individuals' choices and societies' patterns. They also improve the theoretical, empirical and methodological understanding of the role of institutions and culture in different geopolitical and socio-economic realms. By doing so, these contributions place this special issue as prelude to further research on the co-evolution of culture and institutions and on its possible implications on different societal aspects, human development and well-being

Putnam’s instrument revisited. The community network of the industrial districts and a new proxy of social capital

This paper proposes a new proxy of social capital based on the regional density of industrial districts. The advantage of this new proxy is to better deal, at least conceptually, with the main three problems related to the PI advanced by Paldam (2000) which are: the definition of voluntary associations, the intensity of the contacts and the so called “Benignness-weight problem”. In our analysis we show an empirical comparison between the behaviour of our index and that one of the Putnam Instrument across the Italian regions. To do so we use regional data in the 2001 from the Italian National Bureau of Statistics (ISTAT). One of the interesting results from the empirical application is that the new proxy and the Putnam’s instruments present similar patterns, even though with some exceptions

Institutional conformity and regional credit market failures: evidence from the Italian industrial districts

Institutional conformity might help explain regional credit market failures in Italy in terms of insolvency rate. A credit relation is subject to a certain degree of uncertainty about the credible commitment of the parties to fulfil the contract ual obligations. We argue that conformity to informal institutions of reciprocal cooperation and trust can reduce this degree of uncertainty and, hence, contract breaches. We support our argument by conducting an empirical investigation where the regional density of industrial districts is used as indicator of institutional conformity. We find lower insolvency rate in regions with higher institutional conformity. Additionally, we find higher conformity to informal institutions in regions where the punishmen t system reacts quicker to non - compliant behaviours, suggesting a complementary relationship between conformity to informal institutions and lower cost of punishment. One of the advantages of this indicator consists in the possibility of addressing “Ostrom - type” policy recommendations to reduce regional credit market failures