Social capital and poverty in Uganda

Abstract

This paper investigates the links between social capital and household poverty in Uganda. We assume a two-way causal relationship between poverty and access to social capital. This suggests an endogeneity problem, so the paper uses econometric techniques that control for endogeneity. Using two nationally representative data sets, our analyses revealed that access to social capital defined in terms of membership of social organisations positively affects household income and reduces poverty. Education was the key determinant of income and increases the probability of joining social networks. Our results further show that household income and welfare are positively associated with access to social capital or group participation. This suggests that government strategies to increase household income that take into consideration existing social institutions will go a long way to encourage associational growth and performance and consequently reduce poverty.