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A road to trust

Author

Listed:
  • Labonne, Julien
  • Chase, Robert S.

Abstract

The authors explore the relationship between transaction costs and generalized trust. Using panel data from 2,100 households in 135 rural communities of the Philippines, the paper shows that where transaction costs are reduced (proxied by road construction), there is an increase in generalized trust. Consistent with the argument that generalized trust is built through repeated interactions, the authors find that the individuals most likely to engage in exchange exhibit an increase in trust after road construction. These results suggest that, rather than being an input to economic growth, trust might be a product of reduced transaction costs (which also favors growth).

Suggested Citation

  • Labonne, Julien & Chase, Robert S., 2008. "A road to trust," Policy Research Working Paper Series 4706, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4706
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    References listed on IDEAS

    as
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    Cited by:

    1. Yusong Liu & Linyi Zheng & Wenrong Qian, 2023. "How Rural Residents Access News and Its Influence on Social Trust: Based on the Data of the China Family Panel Studies," Sustainability, MDPI, vol. 15(4), pages 1-20, February.
    2. Fischer, Justina A.V., 2012. "Globalization and Political Trust," Papers 285, World Trade Institute.
    3. Antoci, Angelo & Sabatini, Fabio & Sodini, Mauro, 2011. "Economic Growth, Technical Progress, and Social Capital: the Inverted U Hypothesis," MPRA Paper 30326, University Library of Munich, Germany.
    4. Rahman, Muhammad Habibur & Lee, Grace H.Y. & Shabnam, Nourin & Jayasinghe, Susantha, 2020. "Weathering trust," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 449-473.
    5. Behrooz Hassani-Mahmooei & Brett W. Parris, 2014. "Dynamics of effort allocation and evolution of trust: an agent-based model," Computational and Mathematical Organization Theory, Springer, vol. 20(2), pages 133-154, June.
    6. Wahl, Fabian, 2012. "Why it matters what people think: Beliefs, legal origins and the deep roots of trust," FZID Discussion Papers 52-2012, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    7. Hassani Mahmooei, Behrooz & Parris, Brett, 2012. "Dynamics of effort allocation and evolution of trust: an agent-based model," MPRA Paper 44919, University Library of Munich, Germany.

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    Keywords

    Post Conflict Reconstruction; Transport Economics Policy&Planning; Rural Roads&Transport; Social Capital; Corporate Law;
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