Working Papers, Department of Economics, Aarhus School of Business, University of Aarhus
How Does Social Trust Affect Economic Growth?
Abstract: This paper connects two strands of the literature on
social trust by estimating the effects of trust on growth through a set of
potential transmission mechanisms directly. It does so by modelling the
process using a three-stage least squares estimator on a sample of
countries for which a full data set is available. The results indicate that
trust affects schooling and the rule of law directly. These variables in
turn affect the investment rate (schooling) and provide a direct effect
(rule of law) on the growth rate. The paper closes with a short discussion
of the relevance of the findings.
Keywords: Growth; Trust; Transmission mechanisms; (follow links to similar papers)
JEL-Codes: N40; O10; Z13; (follow links to similar papers)
44 pages, May 4, 2006
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