The co-evolution of social capital and financial development

This paper documents the co-evolution of social capital, measured as generalized trust, and financial development over the twentieth century. I use cross generations inherited trust of Americans with foreign ancestors to track trust in their home country in 1913 and 1990. The paper documents a positive cross-section relationship between trust and financial development in 1913. Then, I show that increasing trust is also associated with increasing financial development at the country level over the twentieth century. In other words, countries that experienced larger improvements in trust also experienced a stronger financial development. These results are robust to the introduction of real GDP per capita and trade openness as alternative determinants of financial development.Financial development ; social capital ; trust

The co-evolution of social capital and financial development

This paper documents the co-evolution of social capital, measured as generalized trust, and financial development over the twentieth century. I use cross generations inherited trust of Americans with foreign ancestors to track trust in their home country in 1913 and 1990. The paper documents a positive cross-section relationship between trust and financial development in 1913. Then, I show that increasing trust is also associated with increasing financial development at the country level over the twentieth century. In other words, countries that experienced larger improvements in trust also experienced a stronger financial development. These results are robust to the introduction of real GDP per capita and trade openness as alternative determinants of financial development.Financial development, social capital, trust.

Does trust favor macroeconomic stability?

This paper investigates the relationship between trust and macroeconomic volatility. In a cross section of countries, we show that higher trust is associated with lower macroeconomic instability. We use the inherited trust of Americans as an instrumental variable of trust in their origin country to overcome all potential reverse causality concerns. We use changes in inherited trust over the XXth century to show that increasing trust also decreases volatility across time. Thus, trust is shown to be an important determinant of macroeconomic stability both in space and time. Finally, we show that trust reduces investment volatility but not public expenditure volatility.social capital ; trust ; volatility ; macroeconomic stability

Senior activity rate, retirement incentives and labor relations

How is it that populations react so differently to policy incentives among developed countries? We noticed that senior employment rates not only differ in level strikingly from one country to another, they also differ in their reaction to retirement incentives set by governments. We show the importance of trust given to the employer in wage negotiations by a simple trade-off model. According to this model, reaction of the senior activity rate to policy changes depends on the properties of the distribution of trust to employers at the country level. We then identify these properties by an empirical study based on panel data for nineteen OECD countries from 1980 to 2004. We show that the elasticity of senior males labor force participation rate to retirement incentives is stronger in countries with better and more homogeneously distributed working conditions. This results also applies to countries with higher generalized trust.early retirement incentives ; labor relations ; seniors activity rate ; trust

Allocation of Ordered Exclusive Choices

This note describes the Stata command alloch which helps to allocate exclusive choices among individuals who have ordered preferences over available alternatives

Living in the garden of Eden: Mineral resources foster individualism

Using mineral resources discoveries in the United States since 1800, we argue that mineral mining fosters individualism. Measuring individualism and the demand for redistribution by questions of the General Social Survey (GSS), we show that: (i) individuals living in states with mineral resources are more individualistic and support less redistribution by the government ; (ii) the higher the number of mines in a states, the lower the support for governmental redistribution and the higher the individualism ; (iii) individuals that experienced mineral discoveries during their early adulthood are more individualistic and support less redistribution ; (iv) this effect vanishes over time. These results are robust to the introduction of various explanatory variables that may explain the formation of individualistic values.natural resources ; individualism ; redistribution

Does trust favor macroeconomic stability?

This paper investigates the relationship between trust and macroeconomic volatility. In a cross section of countries, we show that higher trust is associated with lower macroeconomic instability. We use the inherited trust of Americans as an instrumental variable of trust in their origin country to overcome all potential reverse causality concerns. We use changes in inherited trust over the XXth century to show that increasing trust also decreases volatility across time. Thus, trust is shown to be an important determinant of macroeconomic stability both in space and time. Finally, we show that trust reduces investment volatility but not public expenditure volatility.Cet article analyse la relation entre le capital social, mesuré par la confiance, et l'instabilité macroéconomique. Nous montrons que, dans l'espace, une confiance plus importante est associée à une volatilité macroéconomique plus faible. L'utilisation de la confiance héritée par les Américains de leurs ancêtres nous permet d'éviter toute causalité inverse. Nous montrons que la confiance est un important déterminant de la stabilité macroéconomique

The co-evolution of social capital and financial development

This paper documents the co-evolution of social capital, measured as generalized trust, and financial development over the twentieth century. I use cross generations inherited trust of Americans with foreign ancestors to track trust in their home country in 1913 and 1990. The paper documents a positive cross-section relationship between trust and financial development in 1913. Then, I show that increasing trust is also associated with increasing financial development at the country level over the twentieth century. In other words, countries that experienced larger improvements in trust also experienced a stronger financial development. These results are robust to the introduction of real GDP per capita and trade openness as alternative determinants of financial development.Cet article documente l'évolution simultanée du capital social, mesuré par la confiance, et du développement financier au cours du vingtième siècle. J'utilise différentes générations et différentes dates d'immigrations des Américains pour retracer l'évolution de la confiance dans leurs pays d'origine entre 1913 et 1990. Cet article présente tout d'abord la relation positive entre la confiance et le développement financier en 1913. Puis, je montre que ces deux grandeurs ont évolué conjointement au cours du vingtième siècle. En d'autres termes, les pays dont lesquels la confiance a le plus progressé sont aussi ceux dans lesquels le développement financier a été le plus important. Ces résultats empiriques sont robustes à l'introduction du PIB par tête et de l'ouverture commerciale comme autres facteurs explicatifs du développement financier

Efficient and Inefficient Welfare States

This paper shows that cross country differences in the generosity and the quality of the welfare state are associated with differences in the trustworthiness of their citizens. We show that generous, transparent and efficient welfare states in Scandinavian countries are based on the civicness of their citizens. In contrast, the generosity but low transparency of the Continental European welfare states survive thanks to the support of a large share of uncivic individuals who consider that it can be justifiable to misbehave with taxes and social benefits. We also explain why countries with an intermediate degree of trustworthiness of their citizens and of transparency of the government, like Anglo-Saxon countries, have small welfare states. Overall, this paper provides a rationale for the observed persistence of both efficient and inefficient welfare states, as a function of the civicness of the citizens.welfare state, trust, civism, corruption

Protests and Beliefs in Social Coordination in Africa

Leaders' misbehaviors may durably undermine the credibility of the state. Using individual level survey in the aftermath of geo-localized social protests in Africa, we find that trust in monitoring institutions and beliefs in social coordination strongly evolve after riots, together with trust in leaders. As no signs of social unrest can be recorded before, the social conflict can be interpreted as a sudden signal sent on a leader's action from which citizens extract information on the country's institutions. Our interpretation is the following. Agents lend their taxes to a leader with imperfect information on the leader's type and the underlying capacity of institutions to monitor her. A misbehavior is then interpreted as a failure of institutions to secure taxes given by citizens and makes agents (i) reluctant to contribute to the state effort, (ii) skeptical about the contributions of others