Trust and the Welfare State: The Twin Peaks Curve

23 Pages Posted: 10 Jun 2016

See all articles by Yann Algan

Yann Algan

Sciences Po

Pierre Cahuc

Ecole Polytechnique, Paris

Marc Sangnier

Aix-Marseille University - Aix-Marseille School of Economics

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Date Written: June 2016

Abstract

We show the existence of a twin peaks relation between trust and the size of the welfare state that stems from two opposing forces. Uncivic people support large welfare states because they expect to benefit from them without bearing their costs. But civic individuals support generous benefits and high taxes only when they are surrounded by trustworthy individuals. We provide empirical evidence for these behaviours and this twin peaks relation in the OECD countries.

Suggested Citation

Algan, Yann and Cahuc, Pierre and Sangnier, Marc, Trust and the Welfare State: The Twin Peaks Curve (June 2016). The Economic Journal, Vol. 126, Issue 593, pp. 861-883, 2016. Available at SSRN: https://ssrn.com/abstract=2793589 or http://dx.doi.org/10.1111/ecoj.12278

Pierre Cahuc

Ecole Polytechnique, Paris ( email )

1 rue Descartes
Paris, 75005
France

Marc Sangnier

Aix-Marseille University - Aix-Marseille School of Economics ( email )

5-9 Boulevard Bourdet
Marseille, 13001
France

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