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Social network capital, economic mobility and poverty traps

Chantarat, Sommarat; Barrett, Christopher B.

Description

This paper explores the role social network capital might play in facilitating poor agents' escape from poverty traps. We model and simulate endogenous link formation among households heterogeneously endowed with both traditional and social network capital who make investment and technology choices over time in the absence of financial markets and faced with multiple production technologies featuring different fixed costs and returns. We show that social network capital can either complement or...[Show more]

dc.contributor.authorChantarat, Sommarat
dc.contributor.authorBarrett, Christopher B.
dc.date.accessioned2015-12-10T23:24:35Z
dc.identifier.issn1569-1721
dc.identifier.urihttp://hdl.handle.net/1885/67254
dc.description.abstractThis paper explores the role social network capital might play in facilitating poor agents' escape from poverty traps. We model and simulate endogenous link formation among households heterogeneously endowed with both traditional and social network capital who make investment and technology choices over time in the absence of financial markets and faced with multiple production technologies featuring different fixed costs and returns. We show that social network capital can either complement or substitute for productive assets in facilitating some poor households' escape from poverty. However, the voluntary nature of costly link formation also creates exclusionary mechanisms that impede some poor households' use of social network capital. Through numerical simulation, we show that the ameliorative potential of social networks therefore depends fundamentally on the broader socio-economic wealth distribution in the economy, which determines the feasibility of social interactions and the net intertemporal benefits resulting from endogenous network formation. In some settings, targeted public transfers to the poor can crowd-in private resources by inducing new social links that the poor can exploit to escape from poverty.
dc.publisherSpringer
dc.sourceJournal of Economic Inequality
dc.subjectKeywords: Crowding-in transfer; Endogenous network formation; Multiple equilibria; Poverty traps; Social exclusion; Social isolation; Social network capital
dc.titleSocial network capital, economic mobility and poverty traps
dc.typeJournal article
local.description.notesImported from ARIES
local.identifier.citationvolumeOnline 18 Feb 2011
dc.date.issued2011
local.identifier.absfor140205 - Environment and Resource Economics
local.identifier.ariespublicationf2965xPUB1425
local.type.statusPublished Version
local.contributor.affiliationChantarat, Sommarat, College of Asia and the Pacific, ANU
local.contributor.affiliationBarrett, Christopher B., Cornell University
local.description.embargo2037-12-31
local.bibliographicCitation.startpage1
local.bibliographicCitation.lastpage44
local.identifier.doi10.1007/s10888-011-9164-5
local.identifier.absseo970114 - Expanding Knowledge in Economics
dc.date.updated2016-02-24T08:13:46Z
local.identifier.scopusID2-s2.0-84865431249
local.identifier.thomsonID000308651100001
CollectionsANU Research Publications

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