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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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    6. 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.
    7. 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.
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    9. 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.
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    14. 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, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 45(4), pages 471-503.
    15. 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).
    16. Donkor, Emmanuel & Mbeche, Robert & Mithöfer, Dagmar, 2021. "Purchasing Behaviour and Relational Contract Decisions of Retailers in Grasshopper Value Chains in Uganda," 2021 Conference, August 17-31, 2021, Virtual 315105, International Association of Agricultural Economists.
    17. Sytske Groenewald & Erwin Bulte, 2013. "Trust and livelihood adaptation: evidence from rural Mexico," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 30(1), pages 41-55, March.
    18. Zhang, Tingting & Li, Wenquan & Li, Kaixin & Liu, Zhifeng, 2022. "Only words matter? The effects of cognitive abilities on commercial insurance participation," The North American Journal of Economics and Finance, Elsevier, vol. 61(C).
    19. 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.
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    21. Nee, Victor & Opper, Sonja & Holm, Hakan J., 2014. "Social Exchange and Generalized Trust in China," Working Papers 2014:30, Lund University, Department of Economics.
    22. 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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