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The Productivity of Trust

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  • Bjørnskov, Christian
  • Méon, Pierre-Guillaume

Abstract

This paper tests whether social trust affects total factor productivity (TFP). Using both development and growth accounting, we find strong evidence of a causal positive effect of social trust on the level and growth of TFP. We moreover observe that the effect of social trust on TFP runs through economic-judicial institutions, but not through political institutions. Those findings resist a series of robustness checks.

Suggested Citation

  • Bjørnskov, Christian & Méon, Pierre-Guillaume, 2015. "The Productivity of Trust," World Development, Elsevier, vol. 70(C), pages 317-331.
  • Handle: RePEc:eee:wdevel:v:70:y:2015:i:c:p:317-331
    DOI: 10.1016/j.worlddev.2015.01.015
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    More about this item

    Keywords

    total factor productivity; social trust; institutions;

    JEL classification:

    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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