Can social capital facilitate households' donations in rural China?

Charitable donations by individuals are an important component of the third distribution. This paper examines the causal effect of social capital on donations by households in rural China. To do so, we draw on two waves of nationally representative household survey data collected by the authors themselves on 3295 households from eight provinces in China in 2018 and 2022. Our data show that about 24% of sample households ever donated money in 2019-2021, with the primary purpose of helping poor and sick individuals. We further use an instrumental variable approach to address the potential endogeneity of social networks. Results from two-stage least squares suggest that rural households with more social capital (as indicated by stronger social networks and with CPC family members) not only tend to be more likely to donate, but also donate more frequently and more amount during the study period. Results from mechanism analyses suggest that social capital promotes rural households' donations through the information effect, responsibility effect and reputation effect. The above results are robust to different model specifications and weighting schemes. This paper adds empirical evidence to inform policymaking in promoting charitable donations in China's pursuit of common prosperity.