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The Moldable Young: How Institutions Impact Social Trust

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Social trust is linked to many desirable economic and social outcomes, but the causality between trust and institutions is debated. Using new data from a representative sample of 2,668 Swedish expatriates (surveyed in the SOM Institute’s Swedish Expatriate Survey 2014), we use variation in time spent in the new country to infer about the effect of country level institutions and norms (such as corruption perceptions, average trust levels and various aspects of economic freedom) on social trust. The results suggest that individual trust suffers in countries with high corruption, low trust and low legal quality. The effect is relatively small, occurs mainly during the first 3 to 10 years and is observed only among those aged less than 30 at the time of arrival in the new country. The results are robust to controlling for a large array of individual characteristics (including age), and support the view that social trust is sensitive to events that occur early in life. In contrast, after the age of approximately 30, trust seems to be a highly resilient personal trait.

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Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 1132.

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Length: 26 pages
Date of creation: 07 Sep 2016
Handle: RePEc:hhs:iuiwop:1132
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Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden

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Web page: http://www.ifn.se/
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  1. Jeffrey V. Butler & Paola Giuliano & Luigi Guiso, 2016. "The Right Amount Of Trust," Journal of the European Economic Association, European Economic Association, vol. 14(5), pages 1155-1180, October.
  2. Niclas Berggren & Henrik Jordahl, 2006. "Free to Trust: Economic Freedom and Social Capital," Kyklos, Wiley Blackwell, vol. 59(2), pages 141-169, 05.
  3. Christian Bjørnskov & Gert Svendsen, 2013. "Does social trust determine the size of the welfare state? Evidence using historical identification," Public Choice, Springer, vol. 157(1), pages 269-286, October.
  4. Nathan Nunn & Leonard Wantchekon, 2011. "The Slave Trade and the Origins of Mistrust in Africa," American Economic Review, American Economic Association, vol. 101(7), pages 3221-3252, December.
  5. Julie Moschion & Domenico Tabasso, 2014. "Trust of second-generation immigrants: intergenerational transmission or cultural assimilation?," IZA Journal of Migration, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-30, December.
  6. Berggren, Niclas & Bjørnskov, Christian, 2011. "Is the importance of religion in daily life related to social trust? Cross-country and cross-state comparisons," Journal of Economic Behavior & Organization, Elsevier, vol. 80(3), pages 459-480.
  7. Sangnier, Marc, 2013. "Does trust favor macroeconomic stability?," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 653-668.
  8. Yann Algan & Pierre Cahuc, 2010. "Inherited Trust and Growth," American Economic Review, American Economic Association, vol. 100(5), pages 2060-2092, December.
  9. Ljunge, Martin, 2014. "Trust issues: Evidence on the intergenerational trust transmission among children of immigrants," Journal of Economic Behavior & Organization, Elsevier, vol. 106(C), pages 175-196.
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