Chapter 2

Trust, Growth, and Well-Being: New Evidence and Policy Implications

Yann Algan* and Pierre Cahuc,    *Sciences Po, France,    ENSAE-CREST, Ecole Polytechnique, France


This survey reviews the recent research on trust, institutions, and economic development. It discusses the various measures of trust and documents the substantial heterogeneity of trust across space and time. The conceptual mechanisms that explain the influence of trust on economic performance and the methods employed to identify the causal impact of trust on economic performance are reviewed. We document the mechanisms of interactions between trust and economic development in the realms of finance, innovation, the organization of firms, the labor market, and ...

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