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Trust and the Welfare State: The Twin Peaks Curve

  • Algan, Yann

    ()

    (Sciences Po, Paris)

  • Cahuc, Pierre

    ()

    (Ecole Polytechnique, Paris)

  • Sangnier, Marc

    ()

    (University of Aix-Marseille II)

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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 8277.

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Length: 27 pages
Date of creation: Jun 2014
Date of revision:
Publication status: forthcoming in : Economic Journal, 2014
Handle: RePEc:iza:izadps:dp8277
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