DP5068 | Formation of Social Capital in Central and Eastern Europe: Understanding the Gap Vis-a-Vis Developed Countries

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Recent Eurobarometer survey data are used to document and explain the stock of social capital in 27 European countries. Social capital in Central and Eastern Europe ? measured by civic participation and access to social networks ? lags behind that in Western European countries. Using regression analysis of determinants of individual stock of social capital, we find that this gap persists when we account for individual characteristics and endowments of respondents but disappears completely after we control for aggregate measures of economic development and quality of institutions. Informal institutions such as prevalence of corruption appear particularly important.