Human Capital, Social Capital, Ethnic Capital and Employment Outcomes

Yu-Chieh Lo, University of Southern California

This paper looks at how human and social capital interact with each other to affect minorities’ employment outcomes. Two major finds are: first, after controlling human and social capital, the probability for minorities being employed is not less than that for Whites. Second, these two forms of capital can be seen as substitute resources for job-seekers: for people with poor human capital, the relative gain from enhancing their social capital is greater than for people who have good human capital, and the same result is found for the effect of human capital improvement. This paper also has public policy implication: spending on minority’s education program is not just morally appealing, but also economically efficient, in terms of social welfare level, because bettering the human capital of the disadvantaged would produce greater marginal benefit than if we extend the same resources on people who already possess better capital in both forms.