Algan Yann, Cahuc Pierre. In: American Economic Review, vol. 100(5), pages 2060-92, 2010.


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 forbears. 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 20th century by controlling for country fixed effects.