Social capital's role in mitigating economic vulnerability: Understanding the impact of income disparities on farmers' livelihoods

Abstract

The primary objective of this study is to scrutinize the connection between social capital and the quality of life within marginalized communities, aiming to understand their mutual influence. It investigates how social capital influences the vulnerability of farmers' livelihoods using data from the 2018 CHIPS (China Household Income Project) survey, which was made available in 2020. The outcome indicates that farmers' endangered life can drastically decrease without getting stupefied. Moreover, the study underscores the substantial impact of social capital in reducing livelihood vulnerability across the eastern, central, and western regions. However, its efficacy appears less pronounced in the western region compared to the central region, suggesting a more significant influence in the center than in the eastern region. Furthermore, the study reveals that an income gap can affect the accumulation of social capital, and a moderate income gap is most favorable for farmers in building social ties and forming social capital. However, a widening income gap increases the cost and benefits of building social ties, and substantial differences can be obtained if the costs exceed the benefits, and this situation negatively influences the social capital of poor farmers. Overall, the findings confirm the hypothesis that social capital belongs to the poor but highlight the limitation of social capitalization for farmers with vulnerable livelihoods due to the widening income gap. In summary, this research underscores the significance of social capital in mitigating the economic vulnerability faced by impoverished farmers. It also highlights the need for policies focused on enhancing social capital to take into account the influence of income inequality on the accumulation of social capital. These discoveries carry significant implications for addressing poverty and promoting long-term rural development not only in China but also in other regions.