Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 35, No. 2, pp.187-206
ISSN: 1225-0279 (Print)
Print publication date 31 May 2022
Received 28 Mar 2022 Revised 03 May 2022 Accepted 06 May 2022

Determinants of Social Capital in Korea

Donghun Joo ; Joonkyung Ha ; Man-Soo Joo
Donghun Joo, First Author, Associate Professor, Division of Economics, Hanyang University, Hanyangdaehak-ro 55, Sangnok-gu, Ansan-si, Gyeonggi-do 15588, South Korea, Tel: +82-31-400-5631
Joonkyung Ha, Professor, Division of Economics, Hanyang University, South Korea, Tel: +82-31-400-5622
Man-Soo Joo, Professor, Division of Economics, Hanyang University, South Korea, Tel: +82-31-400-5606

JEL Classification: Z10, O53, K30


This study investigates the determinants of social capital in Korea using the law compliance indicator as a measure of generalized trust. Unlike other measures for social capital, the compliance indicator has been compiled for each province in Korea. This novel feature allows for better identification strategies than the country-level data. With the panel data of 16 regions in Korea, we find that in the demographic factors, such as gender and age structure, the compliance indicator is low for males and the elderly. Among variables for economic activity, unemployment rate and per capita GRDP show statistically significant effects. Moreover, the causality tests between the compliance indicator and economic activity show bilateral directions as expected.


Social capital, Trust, Compliance index, Law, Regions in Korea


  • Abrigo, M. R. and I. Love. “Estimation of Panel Vector Autoregression in Stata: a Package of Programs.” The Stata Journal 16 (No.3 2016): 778-804 []
  • Alesina, A. and E. L. Ferrara. “Who trusts others?” Journal of Public Economics 85(No.2 2002): 207-34. []
  • Beugelsdijk, S., H. L. de Groot, and A. B. van Schaik. “Trust and economic growth: a robustness analysis.” Oxford Economic Papers 56 (No. 1 2004): 118-134. []
  • Bjørnskov, C. “Determinants of generalized trust: A cross-country comparison.” Public Choice 130 (No.1 2007): 1-21. []
  • Canova, F., M. Ciccarelli. “Forecasting and turning point predictions in a Bayesian panel VAR model.” Journal of Econometrics 120 (No.2 2004): 327-359. []
  • Delhey, J., K. Newton. Social trust: Global pattern or Nordic exceptionalism? WZB Discussion Paper, 2004.
  • Djankov, S., C. McLiesh, and A. Shleifer. “Private credit in 129 countries.” Journal of Financial Economics 84 (No.2 2007): 299-329. []
  • Gavin, W. T. and A. T. Theodorou. “A common model approach to macroeconomics: using panel data to reduce sampling error.” Journal of Forecasting 24 (No.3 2005): 203-219. []
  • Glaeser, E. L., D. I. Laibson, J. A. Scheinkman, and C. L. Soutter. “Measuring trust.” The Quarterly Journal of Economics 115 (No.3 2000): 811-846. []
  • Helliwell, J. F. and R. D. Putnam “Economic Growth and Social Capital in Italy.” Eastern Economic Journal 21 (No.3 1995): 295-307.
  • Holtz-Eakin, D. Testing for Individual Effects in Dynamic Models Using Panel Data. NBER Technical Working Papers 0057, National Bureau of Economic Research, Inc, 1986. []
  • Holtz-Eakin, D., W. Newey, and H. S. Rosen. “Estimating Vector Autoregressions with Panel Data.” Econometrica 56 (No.6 1988): 1371-95. []
  • Jeong, H. and S. Kim. “Finance, Growth, and Inequality: New Evidence from the Panel VAR Perspective.” Seoul Journal of Economics 31(No.2 2018): 121-143.
  • Kaufmann, D., A. Kraay, and M. Mastruzzi. Governance matters V: aggregate and individual governance indicators for 1996-2005. Policy Research Working Paper Series 4012, The World Bank, 2006. []
  • Kaufmann, D., A. Kraay, and M. Mastruzzi. The worldwide governance indicators: methodology and analytical issues. Policy Research Working Paper Series 5430, The World Bank, 2010.
  • Kim, J., S. Kim, and L. Hyun. Korea General Society Survey: 2003-2013. Seonggyunkwan University, 2016.
  • Kim, W. “Promotion of Generalized Trust and the Role of Government.” Bulletin of Policy Analysis and Assessment 16 (No.3 2006): 221-240.
  • Knack, S. (2001). Trust, associational life, and economic performance. Technical report.
  • Knack, S. and P. Keefer. “Does social capital have an economic payoff? a cross-country investigation.” The Quarterly Journal of Economics 112 (No.4 1997): 1251-1288. []
  • Knack, S. and P. J. Zak. “Building trust: public policy, interpersonal trust and economic development.” Supreme court economic review 10 (2003): 91-107. []
  • Lancaster, T. An Introduction to Modern Bayesian Econometrics. Wiley-Blackwell, 2016.
  • Olsson, O. and G. Hansson, “Country size and the rule of law: Resuscitating Montesquieu.” European Economic Review 55 (No.5 2011): 613-629. []
  • Park, B. Trust and Generation: Generational difference in the trust of relationship, society, and institution. Technical report, Survey Research Center, 2005.
  • Parts, E. The Dynamics and Determinants of Social Capital in the European Union and Neighboring Countries. Technical report, 2013. []
  • Putnam, R. D. Making Democracy Work: Civic Traditions in Modern Italy. Princeton, NJ, USA: Princeton University Press, 1993. []
  • Rice, T. W. and A. Sumberg. “Civic culture and democracy in the American states.” Publius 27 (No.1 1997): 99-114. []
  • Uslaner, E. The moral foundations of trust. Cambridge, UK: Cambridge University Press, 1997
  • Whiteley, P. F. “Economic Growth and Social Capital.” Political Studies 48 (No.3 2000): 443-466. []
  • Woo, C., T. Kim, and W. Jang. Social Capital and Policy in Korea. Working paper 2007-01, Korea Development Institution, 2007.