Selected Econometric Models of Social Capital Formation in New Zealand
This thesis examines the factors contributing to the formation of social capital in New Zealand from three distinct angles. Each of these angles concerns a form of geographically referenced investment, either by individuals through settlement post-migration or their homeownership, or by local government investing in local social infrastructure. The aim of this thesis is to provide the first empirical analysis of social capital formation within New Zealand and to contribute to the existing body of international literature on the subject in areas which have as yet received little or no attention. The first aspect considered is the relationship between homeownership and social capital formation. Prior studies suggest that homeownership is positively related to social capital formation. However, many of these studies find it difficult to control adequately for personal attributes that may be correlated with homeownership while also impacting on social capital formation. The New Zealand Quality of Life survey provides data that enable analysis that controls for these selection effects with propensity score matching methods, while also benchmarking the results by means of regression methods. The results confirm that homeownership exerts positive impacts on the formation of social capital. Concurrently, homeownership demands greater accountability of local government and leads to reduced satisfaction with local government performance – thereby negatively bringing impact upon community social capital. Hence these two dimensions of housing-related social capital work in opposite directions from each other, a finding which has not been previously observed. The role of immigration in social capital formation in New Zealand is the second aspect considered, an important issue for New Zealand given that a quarter of the population was born overseas. Using cross-sectional data from two separate surveys, the 2006 Adult Literacy and Life Skills Survey and the 2008 New Zealand General Social Survey, this thesis evaluates the relationship connecting the birthplace of a migrant and the years since migration with social capital formation. It examines, through a range of regression methods, the factors influencing the stock of social capital held by migrants and the investment of social capital migrants undertake, where social capital investment is separated into bridging and bonding. This chapter finds that stocks of social capital are lowest for migrants in their new host country when they first migrate. This disadvantage appears to decrease over the first five years since migration. In addition, it shows region of birth to be an important factor, with noticeable heterogeneity between different migrant groups. Finally, the section finds that migrant clustering between regions decreases the formation of bridging social capital, while migrant clustering within regions increases the formation of bonding social capital. Thirdly, the thesis investigates the role of local government investment in spatially fixed social capital infrastructure. To achieve this, it links unique data on local social infrastructure expenditure with micro-level individual survey data, which explores self-reported social capital measures of trust and participation in community activities. It uses both probit and tobit models to estimate the impact of social infrastructure expenditure on social capital formation. The results imply that the links between social capital, demographic characteristics, human capital, geography and public social infrastructure investment are more subtle and complex than much of the literature suggests. The analysis presents evidence in support of many of the hypothesized relationships discussed in the social capital literature. The results also suggest that both selection effects and free rider processes shape the impact of public social infrastructure investment.
Economics, Social Capital, Home ownership, Infrastructure, Migration, New Zealand, Econometrics
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