[size=-1]Inherited Trust and Growth

By Yann Algan and Pierre Cahuc



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This paper develops a new method to uncover the causal effect of trust on
economic growth by focusing on the inherited component of trust and its time
variation. We show that inherited trust of descendants of US immigrants is significantly
influenced by the country of origin and the timing of arrival of their
forebears. We thus use the inherited trust of descendants of US immigrants as a
time-varying measure of inherited trust in their country of origin. This strategy
allows to identify the sizeable causal impact of inherited trust on worldwide
growth during the twentieth century by controlling for country fixed effects.