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Trust and Economic Growth

Author

Listed:
  • Sjoerd Beugelsdijk

    (Tilburg University)

  • Henri L.F. de Groot

    (Vrije Universiteit Amsterdam)

  • Anton B.T.M. van Schaik

    (Tilburg University)

Abstract

Economists increasingly pay attention to social capital as an important determinant of macroeconomic growth performance. At the same time, there is discussion regarding the robustness of the results of empirical growth studies. In a seminal paper, Knack and Keefer (1997) assess the effect of trust on growth. This paper analyses the robustness of their results along several dimensions, acknowledging the complexity of therobustness concept. Our findings show that the robustness of the relationship between trust and growth in terms of both the size and the significance of the estimated effect, is highly dependent on the set of conditioning variables. An answer to the question whether there is an economic payoff of trust - and if so, how large this payoff actually is - is therefore difficult to provide on the basis of cross sectional empirical growth studies.

Suggested Citation

  • Sjoerd Beugelsdijk & Henri L.F. de Groot & Anton B.T.M. van Schaik, 2002. "Trust and Economic Growth," Tinbergen Institute Discussion Papers 02-049/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20020049
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    References listed on IDEAS

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    1. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1251-1288.
    2. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
    3. Easterly, William, 1993. "How much do distortions affect growth?," Journal of Monetary Economics, Elsevier, vol. 32(2), pages 187-212, November.
    4. J. Bradford De Long & Lawrence H. Summers, 1991. "Equipment Investment and Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 445-502.
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    Citations

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    Cited by:

    1. Bjørnskov, Christian & Svendsen, Gert Tinggaard, 2002. "Why Does the Northern Light Shine So Brightly? Decentralisation, social capital and the economy," Working Papers 02-15, University of Aarhus, Aarhus School of Business, Department of Economics.
    2. Hans Pitlik & Ludek Kouba, 2014. "Does Social Distrust Always Lead to a Stronger Support for Government Intervention? WWWforEurope Policy Paper No. 8," WIFO Studies, WIFO, number 47113.
    3. Stefano Bartolini & Ennio Bilancini, 2007. "The Social Context of the Labor Supply," Department of Economics University of Siena 511, Department of Economics, University of Siena.
    4. D’Hernoncourt, Johanna & Méon, Pierre-Guillaume, 2012. "The not so dark side of trust: Does trust increase the size of the shadow economy?," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 97-121.
    5. Christian, Bjørnskov, 2003. "Corruption and Social Capital," Working Papers 03-13, University of Aarhus, Aarhus School of Business, Department of Economics.
    6. Bjørnskov, Christian & Svendsen, Gert Tinggaard, 2003. "Measuring social capital – Is there a single underlying explanation?," Working Papers 03-5, University of Aarhus, Aarhus School of Business, Department of Economics.
    7. Hans Pitlik & Ludek Kouba, 2013. "The Interrelation of Informal Institutions and Governance Quality in Shaping Welfare State Attitudes. WWWforEurope Working Paper No. 38," WIFO Studies, WIFO, number 46924.
    8. Beugelsdijk, S. & van Schaik, A.B.T.M., 2001. "Social Capital and Regional Economic Growth," Other publications TiSEM 874f4bc4-bef9-499c-829e-0, Tilburg University, School of Economics and Management.

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    Keywords

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    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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