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A road to trust

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  • Labonne, Julien
  • Chase, Robert S.
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    Abstract

    We explore the relationship between transaction costs and generalized trust. Using panel data from 2100 households in 135 poor rural communities of the Philippines, we show that where costs of interactions are reduced there is an increase in generalized trust. These results have implications for the literature on the links between trust and growth. Indeed, rather than being an input to economic growth, trust might be a product of reduced costs of interactions which also favors growth. Specifically, we find that the individuals most likely to engage in exchange exhibit an increase in trust after road construction.

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    File URL: http://www.sciencedirect.com/science/article/B6V8F-4YR1WRW-1/2/d517cd739739722b2647045a38799117
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

    Volume (Year): 74 (2010)
    Issue (Month): 3 (June)
    Pages: 253-261

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    Handle: RePEc:eee:jeborg:v:74:y:2010:i:3:p:253-261

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    Web page: http://www.elsevier.com/locate/jebo

    Related research

    Keywords: Trust Social capital Growth The Philippines;

    References

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      • Scheinkman, Jose A. & Soutter, Christine L. & Glaeser, Edward Ludwig & Laibson, David I., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
    5. Schechter, Laura, 2007. "Traditional trust measurement and the risk confound: An experiment in rural Paraguay," Journal of Economic Behavior & Organization, Elsevier, vol. 62(2), pages 272-292, February.
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    7. Dean S. Karlan, 2005. "Using Experimental Economics to Measure Social Capital And Predict Financial Decisions," Working Papers 909, Economic Growth Center, Yale University.
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    13. Mu, Ren & van de Walle, Dominique, 2007. "Rural roads and poor area development in Vietnam," Policy Research Working Paper Series 4340, The World Bank.
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    18. Khandker, Shahidur R. & Bakht, Zaid & Koolwal, Gayatri B., 2006. "The poverty impact of rural roads : evidencefrom Bangladesh," Policy Research Working Paper Series 3875, The World Bank.
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    Cited by:
    1. Antoci, Angelo & Sabatini, Fabio & Sodini, Mauro, 2011. "Economic Growth, Technical Progress, and Social Capital: the Inverted U Hypothesis," AICCON Working Papers 86-2011, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    2. Hassani Mahmooei, Behrooz & Parris, Brett, 2012. "Dynamics of effort allocation and evolution of trust: an agent-based model," MPRA Paper 44919, University Library of Munich, Germany.
    3. Fischer, Justina A.V., 2012. "Globalization and Political Trust," MPRA Paper 36327, University Library of Munich, Germany.
    4. Wahl, Fabian, 2012. "Why it matters what people think: Beliefs, legal origins and the deep roots of trust," FZID Discussion Papers 52-2012, University of Hohenheim, Center for Research on Innovation and Services (FZID).

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