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Trust, Market Participation and Economic Outcomes: Evidence from Rural China

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  • Tu, Qin
  • Bulte, Erwin

Abstract

Summary Markets can only function properly in the presence of sufficient trust. We explore the relation between trusting behavior and market integration in rural China. We link the results of a trust experiment to actual behavior in the field (participation in the labor market versus informally exchanging labor), and find that high-trust households are more likely to use formal markets. We proceed by exploring the relation between labor market participation and economic outcomes, finding tentative evidence of a causal relation running from market participation to higher levels of income.

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  • Tu, Qin & Bulte, Erwin, 2010. "Trust, Market Participation and Economic Outcomes: Evidence from Rural China," World Development, Elsevier, vol. 38(8), pages 1179-1190, August.
  • Handle: RePEc:eee:wdevel:v:38:y:2010:i:8:p:1179-1190
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    4. Zhang, Lei & Zhu, Xueqin & Heerink, Nico & Shi, Xiaoping, 2014. "Does output market development affect irrigation water institutions? Insights from a case study in northern China," Agricultural Water Management, Elsevier, vol. 131(C), pages 70-78.
    5. Tu, Qin & Mol, Arthur P.J. & Zhang, Lei & Ruben, Ruerd, 2011. "How do trust and property security influence household contributions to public goods?," China Economic Review, Elsevier, vol. 22(4), pages 499-511.
    6. Siziba, Shephard & Bulte, Erwin, 2012. "Does market participation promote generalized trust? Experimental evidence from Southern Africa," Economics Letters, Elsevier, vol. 117(1), pages 156-160.
    7. Meijerink, Gerdien & Bulte, Erwin & Alemu, Dawit, 2014. "Formal institutions and social capital in value chains: The case of the Ethiopian Commodity Exchange," Food Policy, Elsevier, vol. 49(P1), pages 1-12.
    8. Pamuk, H., 2014. "Innovation systems, saving, trust, and economic development in Africa," Other publications TiSEM c759f3ee-97a6-4689-a0d7-b, Tilburg University, School of Economics and Management.
    9. Robert Gillanders & Olga Neselevska, 2018. "Public Sector Corruption and Trust in the Private Sector," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(8), pages 1288-1317, November.
    10. Pham Quoc Hung & Huynh Viet Khai, 2020. "Transaction cost, price risk perspective and marketing channel decision of small-scale chili farmers in Tra Vinh Province, Vietnam," Asian Journal of Agriculture and rural Development, Asian Economic and Social Society, vol. 10(1), pages 68-80, June.
    11. Joachim Vandercasteelen & Mekdim Dereje & Bart Minten & Alemayehu Seyoum Taffesse, 2018. "Labour, profitability and gender impacts of adopting row planting in Ethiopia," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 45(4), pages 471-503.
    12. Ma, Xianlei & Heerink, Nico & van Ierland, Ekko & Lang, Hairu & Shi, Xiaoping, 2020. "Decisions by Chinese households regarding renting in arable land—The impact of tenure security perceptions and trust," China Economic Review, Elsevier, vol. 60(C).
    13. Ke, Shanzi, 2015. "Domestic Market Integration and Regional Economic Growth—China’s Recent Experience from 1995–2011," World Development, Elsevier, vol. 66(C), pages 588-597.
    14. Dietrich, Stephan & Beekman, Gonne & Nillesen, Eleonora, 2018. "Market integration and pro-social behaviour in rural Liberia," MERIT Working Papers 2018-010, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    15. Nee, Victor & Opper, Sonja & Holm, Hakan J., 2014. "Social Exchange and Generalized Trust in China," Working Papers 2014:30, Lund University, Department of Economics.
    16. van den Akker, Olmo R. & van Assen, Marcel A.L.M. & van Vugt, Mark & Wicherts, Jelte M., 2020. "Sex differences in trust and trustworthiness: A meta-analysis of the trust game and the gift-exchange game," Journal of Economic Psychology, Elsevier, vol. 81(C).

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