Gunawan Prayitno, Kakuya Matsushima, Kiyoshi Kobayashi
Social capital is a multi-faceted concept and is connected to all human interactions. We have simplified human interaction among three agents (young, adult, and old) and tried to develop an economic approach between social capital investment and migration decisions in rural areas in Indonesia. We divided the investment of social capital among human interactions of three agents living in three periods using overlapping generation theory. Social capital is made up of optimal individual investment decisions and accumulation processes. By utilizing a prototype of optimal individual investment decisions and the process of social accumulation, social capital is eventually produced. Social capital is the total stock of social capital of each agent in one period considering, the rate of discount and afterward using the relation to calculate the parameters to measure the social tie effect (strong and weak tie). The investment period in social capital has affected the parameters when the investment of time increases; in this situation, the social capital investment effect becomes smaller. The study shows that when social ties in a region are weak, all agents migrate to seek higher wages. Furthermore, all agents migrate abroad when social ties are weak. The model shows that the decision (to migrate or to stay) is influenced by social capital investment. © 2017 ITB, ASPI dan IAP.
Urban and Regional Planning Department, Brawijaya University, Malang, Indonesia; Graduate School of Management, Kyoto University, Japan
