Galassi, Francesco L. (2000) Measuring social capital: culture as an explanation of Italy’s economic dualism. Working Paper. Coventry: University of Warwick, Department of Economics. Warwick economic research papers (No.553).

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Abstract

The paper presents a quantitative test of the oft-repeated view that Italy’s backward and poor South suffered from low “social capital”, a tendency to defect from co-operative engagements. The problem with such assertions is that they run the risk of taking as evidence in favour of the hypothesis the very observations that need to be explained. The analysis carried out in this work tries to break out of this impasse by analysing the conditions under which it was ex ante welfare-improving for farmers in early 20th century Italy to join an unlimited liability rural co-operative bank which would give them access to cheaper credit but also exposed them to the risk of their neighbours’ defection. These co-ops are a prime testing ground for the cultural explanation in that they spread rapidly throughout Northern Italy in the late 19th century, but never gained a similar popularity in the South. I estimate the switching function for these co-ops in different parts of the country to test whether Northern and Southern farmers faced significantly different choice sets when making the decision to join. Identical choice sets but differential responses would of course favour the cultural explanation of the South’s backwardness. The results suggest that for the same parameter values, the choice sets for North and South were different, though whether this difference was large enough to explain the full difference in responses is not completely clear.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HC Economic History and Conditions D History General and Old World > DG Italy
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Infrastructure (Economics) -- Italy, Social capital (Sociology) -- Italy, Culture -- Italy, Italy -- Economic conditions
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Official Date:	February 2000
Dates:	Date Event February 2000 Published
Number:	No.553
Number of Pages:	37
Institution:	University of Warwick
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access (Creative Commons)

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