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The productivity of trust

  • Christian Bjørnskov
  • Pierre-Guillaume Méon

This paper returns to one of the early questions of the literature on social trust, whether trust affects total factor productivity (TFP). Using both development and growth accounting, we find strong evidence of a causal effect of trust on the level and growth of TFP. Using a three-stage least-squares procedure, we moreover observe that the effect of trust on TFP runs entirely through property-rights institutions and not political institutions. Those findings resist a series of robustness checks.

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Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 10-042.

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Length: 77 p.
Date of creation: Aug 2010
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Publication status: Published by:
Handle: RePEc:sol:wpaper:2013/61225
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