Ponzetto, Giacomo A. M.Troiano, Ugo Antonio2025-04-292025Ponzetto GAM, Troiano UA. Social capital, government expenditures, and growth. J Eur Econ Assoc. 2025 Apr;23(2):632-81. DOI: 10.1093/jeea/jvae0431542-4766http://hdl.handle.net/10230/70228Supplementary materials files: online appendix; replication data.This paper shows that social capital increases economic growth by raising government investment in human capital through better political incentives and selection. We provide empirical evidence that a greater share of output is spent on public education where social capital is higher, both across countries and across U.S. states. We develop a theoretical model of stochastic endogenous growth with imperfect political agency. Only some people correctly anticipate the future returns to current spending on public education. Greater social diffusion of information makes this knowledge more widespread among voters. As a result, social capital alleviates myopic political incentives to underinvest in human capital. It also helps voters select politicians who ensure high productivity in public education. Through this mechanism, we show that social capital raises the equilibrium growth rate of output and reduces its volatility.application/pdfeng© Oxford University Press. This is a pre-copyedited, author-produced version of an article accepted for publication in Journal of the European Economic Association following peer review. The version of record Ponzetto GAM, Troiano UA. Social capital, government expenditures, and growth. J Eur Econ Assoc. 2025 Apr;23(2):632-81. DOI: 10.1093/jeea/jvae043 is available online at: https://academic.oup.com/jeea/article/23/2/632/7720519 and https://doi.org/10.1093/jeea/jvae043.info:eu-repo/semantics/articlehttp://dx.doi.org/10.1093/jeea/jvae043Social capitalEducation expenditureEconomic growthElectionsGovernment expenditureImperfect informationinfo:eu-repo/semantics/embargoedAccess