In this paper we attempt to quantify the impact of social capital on income. We follow Putnam’s  approach and we construct a synthetic index for social capital using a multivariate probit model. Social capital is considered as one of the crucial individual endowments, next to physical and human capital. In a second step, we estimate the impact of the synthetically constructed social capital index on an individual’s income using a Mincer-type earnings equation. The results show that social capital explains up to 20% of income variation both at the individual and household level. However, human capital and physical capital remain the critical determinants of individual income.
University of Warsaw, Faculty of Economic Sciences
University of Warsaw; Faculty of Economic Sciences
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