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Paul Killerby

Killerby, P. (2001) "Social capital and economic performance: A latent variables approach", presented at the New Zealand Association of Economists (NZAE) annual conference, Christchurch, New Zealand..

Abstract

Social capital is an abstract concept underlying a range of socio-political qualities that facilitate collective action. Theory and evidence suggest that social capital may affect both economic performance and overall human welfare. Most previous empirical studies have tested this by entering individual social capital indicators into regression equations. Such an approach increases the likelihood of biased parameter estimates due to simultaneity as well as measurement error associated with the presence of unobservable variables. This paper adopts a latent-variables approach, combining factor analysis and structural equations modelling for a large sample of countries. The results indicate that social capital has a significant impact on investment, poverty alleviation and overall human welfare.

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