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The productivity of trust

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  • Christian Bjørnskov
  • Pierre-Guillaume Méon

Abstract

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.

Suggested Citation

  • Christian Bjørnskov & Pierre-Guillaume Méon, 2010. "The productivity of trust," Working Papers CEB 10-042, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:sol:wpaper:2013/61225
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    Keywords

    Total factor productivity; Social trust;

    JEL classification:

    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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