Working Paper: CEPR ID: DP10061
Authors: Yann Algan; Pierre Cahuc; Marc Sangnier
Abstract: We show the existence of a twin peaks relation between trust and the size of the welfare state that stems from two opposing forces. Uncivic people support large welfare states because they expect to benefit from them without bearing their costs. But civic individuals support generous benefits and high taxes only when they are surrounded by trustworthy individuals. We provide empirical evidence for these behaviors and this twin peaks relation in the OECD countries.
Keywords: Trust; Welfare States
JEL Codes: H1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| trust (G21) | size of the welfare state (H53) |
| uncivic individuals (P37) | support for larger welfare states (P16) |
| civic individuals (Z18) | support for smaller welfare states (P16) |
| share of uncivic citizens (D72) | demand for generous welfare state (H53) |
| political power shifts from uncivic to civic individuals (P26) | drop in welfare state support (I38) |
| all individuals civic (H49) | strong support for welfare state (H53) |
| trustworthiness (Z13) | transparency and effectiveness of welfare states (H53) |
| corrupt states (H57) | sustain larger welfare systems with uncivic support (I39) |