Discussion Paper Details

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Title: Trust and the Welfare State: the Twin Peaks Curve

Author(s): Yann Algan, Pierre Cahuc and Marc Sangnier

Publication Date: July 2014

Keyword(s): trust and welfare states

Programme Area(s): International Macroeconomics, Labour Economics and Public Economics

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.

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Bibliographic Reference

Algan, Y, Cahuc, P and Sangnier, M. 2014. 'Trust and the Welfare State: the Twin Peaks Curve'. London, Centre for Economic Policy Research.