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Trust and the Welfare State: The Twin Peaks Curve

Author

Listed:
  • Yann Algan

    (Sciences Po)

  • Pierre Cahuc

    (CREST-ENSAE, École Polytechnique, IZA, CEPR)

  • Marc Sangnier

    (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS)

Abstract

We show the existence of a twin peaks relation between trust and the size of the welfare state that stems from two opposing forces. Uncivic people support large welfare states because they expect to benefit from them without bearing their costs. But civic individuals support generous benefits and high taxes only when they are surrounded by trustworthy individuals. We provide empirical evidence for these behaviors and this twin peaks relation in the OECD countries.

Suggested Citation

  • Yann Algan & Pierre Cahuc & Marc Sangnier, 2014. "Trust and the Welfare State: The Twin Peaks Curve," AMSE Working Papers 1424, Aix-Marseille School of Economics, France, revised Jun 2014.
    • Handle: RePEc:aim:wpaimx:1424
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    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • Z1 - Other Special Topics - - Cultural Economics

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