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Trust and the Welfare State: The Twin Peaks Curve

  • Yann Algan

    ()

    (Department of Economics, Sciences Po - Sciences Po)

  • Pierre Cahuc

    (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique)

  • Marc Sangnier

    ()

    (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - École des Hautes Études en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM))

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.

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Paper provided by HAL in its series Working Papers with number halshs-01000117.

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Date of creation: Jun 2014
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Handle: RePEc:hal:wpaper:halshs-01000117
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