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Humboldt-Universität zu Berlin - Lebenswissenschaftliche Fakultät - Quarterly Journal of International Agriculture

Quarterly Journal of International Agriculture No. 1/12


Investigating Endogeneity Effects of Social Capital on Household Welfare in Nigeria:
A Control Function Approach

A.A. Adepoju
Ladoke Akintola University of Technology, Ogbomoso, Nigeria

O.A. Oni
University of Ibadan, Ibadan, Nigeria


Abstract

This study examined the relationship between social capital and household welfare. Primary data was collected from 300 households in the rural southwest of Nigeria. The age of respondents; sex, education, marital status, household size and farming status make a significant contribution to changes in household welfare. Also, the decision making index and meeting attendance are statistically significant and both are positively and negatively related to household welfare, respectively. Results of the two stage least square reveal the exogeneity of social capital. However, the use of the control function model indicates that social capital is truly endogenous to household welfare due to non-linear interactions between social capital and unobservable variables.

Keywords: endogeneity, welfare status, control function, social capital, Nigeria

JEL: I31

Vol. 51 (2012), No. 1: 73-96