The Causal Effect of Social Capital in the Labor Market Identification Challenges and Strategies

Although there has been a large body of empirical literature assessing the role of social capital in the labor market, it is still unclear whether the relationship between measures of social capital and individual outcomes is causal due to the presence of endogeneity. This article offers a systematic review of the progress made by social scientists in alleviating the endogeneity bias and improving causal inferences on the effects of social capital in the labor market. The full typology of social capital is examined and four most salient sources of endogeneity that limit casual inference are addressed.