The Long and Winding Road: Social Capital and Commuting

Abstract

We develop a two-sector model to analyze which kind of social organization generates trust. Social capital is de…ned as trust. We examine two communities: the bedroom community in which people commute long distance to work and the virility community in which people do not commute to work. The hypothesis is that people do not have time to interact spontaneously out- side work in the bedroom community. We show that in the bedroom community social capital cannot accumulate. Hence our results show that time spent in- teracting with your neighbor must be added as an important production factor when considering the formation of social capital in society. Thus, in a commu- nity where agents only interact when producing output, social capital may not accumulate To our knowledge, no such attempt to model social capital has yet been undertaken and this gap or ‘missing link’in economic debates has to be developed to grasp a more holistic understanding of the big di¤erences in the wealth of nations or regionsSocial capital; Two-Sector Model; Indeterminacy