Can social capital reduce poverty? A study of rural households in Eastern Bhutan

This study examines the impact of social capital on the poverty of rural households in eastern Bhutan, with a particular focus on households' participation in community groups, which can be a proxy for the structural aspect of social capital. Using a two-stage probit least squares simultaneous equation model, the present study reveals that social capital positively contributes to poverty reduction in Bhutan. This study also finds that non-farm income is important for poverty reduction in rural areas. Our results, however, indicate that poor households in remote areas are discouraged from participating in community groups