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Culture, Cooperation and Economics

Final Report Summary - TRUST (Culture, Cooperation and Economics)

The ERC Staring Grant “Trust” studies the interplay between the culture of cooperation, institutions and economics.

A - The first part of the ERC Trust aims at providing a new approach of economic decisions based on moral values and more specifically on cooperative values such as trust.
In “Inherited Trust and Growth” (American Economic Review, 2010), I lay down the foundation of the research project by identifying the causal impact of trust on economic development by estimating the inherited component of trust. I find that inherited trust has explained a substantial share of economic development on a sample of 30 countries during the post-war period, by improving total factor productivity and the accumulation of human and physical capital.
In “Regulation and Distrust” (Quarterly Journal of Economics, 2010) and “The Civil society and the State” (Journal of the European Economic Association, 2011) I document that in a cross-section of countries, government regulation on product market and labor market respectively are strongly negatively correlated with trust. I explain what is perhaps one of the central puzzles in research on political beliefs: why do people in countries with bad governments want more government intervention? I test the implications of the model using country- and individual-level data on trust and beliefs about the role of government, as well as on changes in beliefs during the transition from socialism.
In « Efficient and Inefficient Welfare States » (Economic Journal, forthcoming 2014, Top 10 most downloaded paper from IZA) and “Family values and the regulation of labor” (Journal of the European Economic Association, 2014, forthcoming), I investigates the effect of trust and social capital on the design of welfare states and the trade-off between liberalism, corporatist/familial welfare states in Mediterranean countries and social-democracy/flexisecurity in Nordic countries.
Finally, the two working papers « Social Motives and the Organization of Production: Experimental Evidence from Open source Software » and « Cooperation in a Peer Production Economy Experimental Evidence from Wikipedia” study the prosocial foundations of cooperation in peer production economy, like Wikipedia and Open Software, by using online experimental economics to elicit the social motivation of developers.

B - The second part of the project looks at how the economic environment and public policy shape cultural and social values.
The paper “The Economic Incentives of Cultural Transmission: Spatial Evidence from Naming Patterns across France” (Sciences Po Working Paper 2012,) show important economic determinants of cultural transmission by looking at the cultural type of the names given by parents to their newborn children. The paper “Diversity and Public Good: A Natural Experiment with Exogeneous Residential Allocation” (Revise and Resubmit to the Journal of Political Economy) demonstrates the effects of urban policy, such as public housing allocations, on the building of social trust among neighbors.
In two other papers, we show the impact of education policy on the development of pro-social behavior. The paper “Teaching practices and Social capital” (American Economic Journal: Applied economics, 2013) uses several data sets to consider the effect of teaching practices, in particular horizontal teaching and working in groups, on student beliefs, as well as on organization of firms and institutions. The evidence supports the idea that progressive education promotes social capital.
The paper “The Long-Term effect of Early childhood Pro-Social Interventions”analyzes the long-term economic effects of early childhood intervention aimed at developing social skills of children. Our analysis is based on the Montreal Longitudinal Experimental Study (ELEM project) that randomly allocated 250 boys with initial disruptive attitudes between a treated and a control group in 1983. The preventive intervention was a two-year program promoting social skills training of the children and parent training in child rearing. I show that the adults in the treated group have significantly higher labor market performance than the non-treated group, and have also more favorable social outcomes, measured by lower criminality rates and higher social capital.