How Does Social Trust Affect Economic Growth?
Aarhus University - Department of Economics and Business; Research Institute of Industrial Economics (IFN); Center for Political Studies
April 2, 2009
Aarhus Economics Working Paper No. 06-2
This paper connects two strands of the literature on social trust by estimating the effects of trust on growth through a set of potential transmission mechanisms directly. It does so by modelling the process using a three-stage least squares estimator on a sample of countries for which a full data set is available. The results indicate that trust affects schooling and the rule of law directly and thereby raises economic growth rates. The paper closes with a short discussion of the relevance of the findings.
Number of Pages in PDF File: 43
Keywords: Growth, Trust, Transmission mechanisms
JEL Classification: O10, N40, Z13
Date posted: May 9, 2006 ; Last revised: August 7, 2014