Social Trust and the Growth of Schooling

Abstract

The paper develops a simple model to exemplify how social trust might affect the growth of schooling through lowering transaction costs associated with employing educated individuals. In a sample of 52 countries, the paper thereafter provides empirical evidence that trust has led to faster growth of schooling in the period 1960-2000. The findings are robust to the inclusion of a set of control variables and being estimated using an instrumental variables approach.

Keywords: Trust, Schooling, Economic development

JEL Classification: J24, O15, Z13