Social capital and household welfare in South Africa, 1993-98

The aim in this study is to determine the nature of the causal relationship, if any, between ’social capital’, as measured by household membership in formal and informal groups and household welfare in South Africa. Using a recently collected panel data set in South Africa’s largest province, we estimate per capita expenditure functions including measures of social capital. After controlling for fixed effects and simultaneity, we find social capital has no effect in 1993 but a positive and significant effect in 1998.