Comparison of the effects of homeownership by individuals and their neighbors on social capital formation: Evidence from Japanese General Social Surveys

This paper, using individual data from Japan, explores how the circumstances of where a person resides is related to the degree of their investment in social capital. Controlling for unobserved area-specific fixed effects and various individual characteristics, I found: (1) not only is the rate of homeowners in a locality positively related to investment in social capital, but also the rate of homeownership there increases an individual's investment in social capital and (2) the effect of local neighborhood homeownership is distinctly larger than that of an individual's when endogeneity bias is controlled for using instruments such as land price and the rental price of an apartment.

► Individual data from Japan is used.
► This paper explores how the circumstances of where a person resides is related to the degree of their investment in social capital.
► The rate of homeowners in a locality is positively related to investment in social capital.
► The effect of local neighborhood homeownership is distinctly larger than that of an individual's.