E2016005                                                                                                March 2016
Gordon G. Liua, Xindong Xueb,c,*， Chenxi Yud, Yafeng Wange

a National School of Development, Peking University, China

b School of Public Administration, Zhongnan University of Economics and Law, China

c Co-innovative Research Center for Health Insurance, Hubei University of Economics, China

d Woodrow Wilson School of Public and International Affairs, Princeton University, United States

e Institute of Social Science Survey, Peking University, China

Abstract

This paper uses longitudinal data from China to examine the causal relationship between structural social capital and health among Chinese older adults. We control for the potential endogeneity of social capital via instrumental variable approach and account for the possible contextual confounding effects by including community-level social capital. We use three indicators to measure individuals’ general, physical, and mental health respectively. Results indicate that social capital has a significant and positive effect on general and physical health. Based on the IV findings, a one standard-deviation increase in social capital leads to a 4.9 standard-deviation decrease in the probability of having bad health and a 2.2 standard-deviation decrease in physical activity limitations. Our results are robust to a series of sensitivity checks. Further analysis suggests some heterogeneous effects by age, but not by gender and area of residence.

Key words: Social capital; Health; Fixed effects; Instrumental variable; Heterogeneity; China

JEL codes: I14; I18; Z1

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