Trust and schooling in the United States
I investigate the effects of trust on human capital measured as average years of schooling in U.S. states using data from the 1980s and the 1990s. I find robust evidence that an increase in trust increases schooling across U.S. states. According the results of the seemingly unrelated regression estimation, a 25 percentage point increase in Trust increases the average years of schooling by approximately 1.5 months. This is not insignificant since more than $5000 increase in per capita income (in 2000 prices) is needed to have the same effect on schooling.
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