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Social Attitudes and Economic Development: An Epidemiological Approach

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  • Algan, Yann

    ()
    (Sciences Po, Paris)

  • Cahuc, Pierre

    ()
    (Ecole Polytechnique, Paris)

Abstract

In this paper we develop a new empirical approach to uncovering the impact of social attitudes on economic development. We first show that trust of second-generation Americans is significantly influenced by the country of origin of their forebears. In the spirit of the epidemiology literature, we interpret this phenomenon as the consequence of inherited social attitudes. We show that trust inherited by second-generation Americans from their country of origins has changed over time. This result allows us to use the inherited trust of second-generation Americans as a time-varying instrument to track back the evolution of trust in the home country of their parents. This strategy enables us to identify the specific impact of inherited trust on economic development relative to other traditional candidates, such as institutions and geography, by controlling for country fixed effects. We find that inherited trust has explained a substantial share of economic development on a sample of 30 countries during the post-war period, by improving total factor productivity and the accumulation of human and physical capital.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2935.

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Length: 49 pages
Date of creation: Jul 2007
Date of revision:
Publication status: published as 'Inherited Trust and Growth' in: American Economic Review, 2010, 100 (5), 2060 - 2092
Handle: RePEc:iza:izadps:dp2935

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Keywords: social capital; trust; economic development; growth;

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References

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  1. Algan, Yann & Cahuc, Pierre, 2005. "The Roots of Low European Employment : Family Culture ?," CEPREMAP Working Papers (Docweb) 0512, CEPREMAP.
  2. Patrick Francois & Jan Zabojnik, 2005. "Trust, Social Capital, and Economic Development," Journal of the European Economic Association, MIT Press, MIT Press, vol. 3(1), pages 51-94, 03.
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  8. Alesina, Alberto F & La Ferrara, Eliana, 2000. "Who Trusts Others?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2646, C.E.P.R. Discussion Papers.
  9. Benabou, Roland & Tirole, Jean, 2004. "Belief in a Just World and Redistributive Politics," Papers, Princeton University, Research Program in Political Economy 08-15-2005a, Princeton University, Research Program in Political Economy.
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  13. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2002. "Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development," NBER Working Papers 9305, National Bureau of Economic Research, Inc.
  14. Dohmen, Thomas & Falk, Armin & Huffman, David B. & Sunde, Uwe, 2006. "The Intergenerational Transmission of Risk and Trust Attitudes," IZA Discussion Papers 2380, Institute for the Study of Labor (IZA).
  15. Antecol, Heather, 2000. "An examination of cross-country differences in the gender gap in labor force participation rates," Labour Economics, Elsevier, Elsevier, vol. 7(4), pages 409-426, July.
  16. Alberto Alesina & Nicola Fuchs-Schundeln, 2005. "Good bye Lenin (or not?): The effect of Communism on people's preferences," Harvard Institute of Economic Research Working Papers 2076, Harvard - Institute of Economic Research.
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  18. Timothy Guinnane & Carolyn Moehling & Cormac O Grada, 2002. "The Fertility of the Irish in America in 1910," Working Papers, Economic Growth Center, Yale University 848, Economic Growth Center, Yale University.
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