Persistent inequality and social relations: An intergenerational model

ABSTRACT This paper studies the influence of individual social capital on the persistence of socioeconomic inequality. The set of social relations constitute a form of capital that provides the individual with a wide range of resources. Social capital interacts with other forms of capital, particularly with human capital, to enhance inequality. The overlapping-generations model proposed here focuses on the long-term investment processes in human and social capital. When these effects are considered, a society may end up divided into two groups. The first comprises people stuck in a trap of low intergenerational mobility resources. The second group includes people with increasing levels of education and social capital. Within the last group, income inequalities persist due to initial differences in social capital.