Economic Segregation and Social Capital in Germany

• In Event: The Political Economy of Wealth Inequality

Abstract

In many countries, rising inequality has also led to growing economic segregation. Rich and poor people are increasingly living in regions and neighborhoods separated and isolated from one another, with potentially negative effects on economic mobility and opportunity, social and political inclusion, and public goods provision. This paper examines the socio-political consequences of economic segregation across municipalities in Germany from 2005 to 2020. I first analyze economic segregation at the municipality level using new find-grained geocoded raster data and combine it with municipal-level data on election outcomes and spending on public goods. I then draw on administrative data of all civic associations to study whether social capital either mitigates such negative consequences by providing opportunities for collective action, civic engagement, and empathy, or worsens socioeconomic disparities in segregated areas by allowing the rich to concentrate and amplify their political influence, hoard resources, and exclude the poor. I find that rising economic segregation reduces political participation and municipal spending and increases vote shares for the far-right. Some types of civic associations weaken this link, while others amplify it. I complement this analysis with original survey data, demonstrating how economic segregation affects residents’ political preferences and electoral behavior. The findings provide new insights into the extent of economic segregation and how social capital can mitigate its negative socio-political consequences.

Author

• Andreas Wiedemann, Princeton University