Accession Number : ADA435747


Title :   Middle-Class Consensus, Social Capital and the Mechanics of Economic Development


Corporate Author : FEDERAL ARMED FORCES UNIV HAMBURG (GERMANY) DEPT OF ECONOMICS


Personal Author(s) : Josten, Stefan D


Full Text : https://apps.dtic.mil/dtic/tr/fulltext/u2/a435747.pdf


Report Date : Jan 2005


Pagination or Media Count : 34


Abstract : This paper analyzes a heterogeneous-agents endogenous-growth model incorporating both transaction costs and social capital. An individual can either become an active part of the society's middle-class networks of trust and mutual co-operation, thus making a positive contribution to overall social capital. Alternately, the individual can stay socially disintegrated and free-ride on the community's social capital. Due to the existence of asymmetric information, agents face a moral-hazard problem on the credit market which gives rise to transaction costs and can be alleviated by private, governmental or social governance structures. An increase in inequality and shrinking of the middle class depresses the community's social capital, which, in turn, weakens the informal social governance system and increases economy-wide transaction costs. As a result a more unequal distribution lowers the economy's growth rate.


Descriptors :   *DISTRIBUTION , *ECONOMIC DEVELOPMENT , ECONOMIC ANALYSIS , GROWTH(GENERAL) , RATES , COSTS , ASYMMETRY , GERMANY , FINANCE , MONEY


Subject Categories : Economics and Cost Analysis


Distribution Statement : APPROVED FOR PUBLIC RELEASE