Andrea Tesei (Universitat Pompeu Fabra)
13 February 2012 @ 12:00
Existing studies of social capital formation in US metropolitan areas have found that social capital is lower when there is more income inequality and greater racial fragmentation. I add to this literature by examining the role of income inequality between racial groups (racial income inequality). I find that greater racial income inequality reduces social capital. Also, racial fragmentation is no longer a signicant determinant of social capital once racial income inequality is accounted for. This result is consistent with a simple conceptual framework where concurrent dierences in race and income are especially detrimental for social capital formation. I find empirical support for further implications deriving from this assumption. In particular, I show that racial income inequality has a more detrimental effect in more racially fragmented communities and that trust falls more in minority groups than in the majority group when racial income inequality increases.