Impact Of Social Capital On Individual Well-Being In Poland. Proxy-Based Approach

In this paper we attempt to quantify the impact of social capital on individual well-being. We follow the Putnam (1995) approach and select five key social capital components to construct a synthetic index for social capital using a multivariate probit model. Social capital is considered as one of the three crucial individual endowments: physical capital, human capital and social capital. The impact of the synthetically constructed social capital index on individual’s well-being is estimated using a Mincer type earning equation. The results show that social capital explains up to 20% of income variation both at individual and household level. However, human capital and physical capital remain the critical determinants of individual income.