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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 forebears. 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 twentieth century by controlling for country fixed effects. (JEL N11, N12, N31, N32, O47, Z13)
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Inherited Trust and Growth1
Yann Algan (Science Po, OFCE) Pierre Cahuc (Ecole Polytechniique, CREST, IZA)
September 2009
1We thank four anonymous referees, Daron Acemoglu, Philippe Aghion, Alberto Bisin, Olivier Blanchard,
Daniel Cohen, Esther Duo, Francis Kramarz, Guy Laroque, Nathan Nunn, Thomas Philippon, Bob Putnam,
Richard Rogerson, Sebastien Roux, Andrei Shleifer, Mathias Thoenig and Thierry Verdier for their comments.
We are indebted to Raquel Fernandez who have provided us encouragement and advises in developing our
approach. We are also grateful to Luigi Guiso who gave us helpful comments concerning the empirical strategy.
Abstract
This paper develops a new method to uncover the causal eect of trust on growth, by focusing on the
inherited component of trust and its time variation over long periods. We rst show that inherited
trust of descendants of US-immigrants is signicantly inuenced by the country of origin and the
timing of arrival of their forbears. This result allows us to use the inherited trust of descendants
of US-immigrants as a time-varying measure of inherited trust in their country of origin. We then
identify the specic impact of inherited trust on growth relative to other traditional candidates, such
as institutions and geography, by controlling for country xed eects. We show that the changes in
trust over the 20th century explain a substantial part of the evolution of economic development for a
large panel of countries from all over the world.
Keywords:Social capital, trust, economic development, growth.
JEL codes: O10, F10, P10, N13.
1Introduction
What are the fundamental causes of large dierences in income per capita across countries? Although
there is still little consensus on the answers to this question, a growing literature considers that
trust is one of the main determinants of current economic development.1As stressed by Arrow (1972)
“Virtually every commercial transaction has within itself an element of trust, certainly any transaction
conducted over a period of time. It can be plausibly argued that much of the economic backwardness
in the world can be explained by the lack of mutual condence.” A prerequisite for the successful
development of market economies would be to depart from closed group interactions and to enlarge
exchanges to anonymous others. In that regard, generalized trust and trustworthiness appear as the
keystone for successful economic development. This idea has a long tradition in the political sciences
since the seminal works by Baneld (1958), Gambetta (1988), Coleman (1990), Greif (1993), Putnam
(1993, 2000) and Fukuyama (1995). This view has recently been restated by economists using questions
on generalized trust from cross-country social surveys like the World Values Survey (see La Porta et
al., 1997, Knack and Keefer, 1997, Tabellini, 2009).
Nonetheless, the economic literature cannot explain easily the causal eect of trust on growth. The
main reason is that previous studies identify the eect of trust on income per capita from cross-country
or cross-regional dierences, without any time variation. This makes it impossible to control for specic
invariant national or regional features which could codetermine both trust and economic development.
For example, Tabellini (2009) analyzes the role of culture on income per capita of European regions by
using historical variables (institutional history and literacy rate) as an instrument for contemporaneous
trust. Though this analysis exploits variations in the historical variables across regions, which enables
to control for country xed eects, it makes it impossible to control for regional xed eects. It is
thus dicult to exclude the possibility that some time invariant factors, such as the geography of
the region, could cause both the low literacy rate in the region and the present low level of trust.
This diculty is common to all studies using time-invariant instruments for trust, such as hierarchical
religions (La Porta et al., 1997) or ethnic fractionalization (Knack and Keefer, 1997).
The above approach leaves open the question as to whether or not the level of trust does matter per
se in explaining economic development or if it picks up the deeper inuence of time invariant features
such as legal origins (Glaeser and Shleifer, 2002; La Porta et al., 2008), the quality of institutions
(Hall and Jones, 1999; Acemoglu et al., 2001), initial education (Glaeser et al., 2004), the extent
of fractionalization (Rodrick, 1999, Rodrick et al., 2004, Alesina et al., 2001) or geography (Sachs,
1In this paper, we focus on beliefs and avoid loaded terms such as “social capital” and “culture”. There is a vast
literature on the determinants of such beliefs and their relationships with institutions and economic outcomes. See,
among others: Baneld (1958), Gambetta (1988), Coleman (1990), Putnam (1993), Knack and Keefer (1997), La Porta
et al. (1997) , Alesina and La Ferrara (2002), Guiso et al. (2004, 2006, 2007, 2008, 2009), Tabellini (2008, 2009),.Algan
and Cahuc (2009), Nunn and Wantchekon (2009), and Aghion et al. (2010).
1
2003). What one needs is thus to nd a measure for trust with intertemporal variation, allowing one
to control for time invariant specic factors. The dicultyinperformingsuchanexerciseisthatthere
is no long-time series on the evolution of trust. At best, it is possible to go back only to the 1980s to
have a measure of trust in cross-country surveys.
Our paper provides a new empirical strategy to uncover the causal eect of trust on economic de-
velopment by focusing on the inherited component of trust and on its time variation over long periods.
Since it is already well-established that the parents’ social capital is a good predictor of the social
capital of children (see Rice and Feldman, 1997, Putnam, 2000; Guiso et al., 2006), we use the trust
that US descendants have inherited from their forebears who immigrated from dierent countries at
dierent dates to detect changes in inherited trust in the countries of origin. For instance, by com-
paring Americans with Italian and German origin whose forebears migrated between 1950 and 1980,
we can detect dierences in trust inherited from these two source countries between 1950 and 1980.
We can get time varying measures of trust inherited from these two countries by running the same
exercise for forebears who immigrated in other periods, for instance between 1920 and 1950. Once
we have obtained time varying measures of inherited trust, we can estimate the impact of changes in
inherited trust on changes in income per capita in the countries of origin. This method allows us to
address the main challenges mentioned above to identify the eect of trust on economic development.
By focusing on the inherited component of trust, we avoid reverse causality. By providing a time-
varying measure of trust over long periods, we can control for both omitted time invariant factors
and other observed time-varying factors such as changes in the economic, political, cultural and social
environments. The estimation of inherited trust is carried on the General Social Survey, which pro-
vides information about the contemporaneous trust of US descendants of immigrants and the wave of
immigration of their forebears. This strategy allows us to track back the evolution of inherited trust
over the whole 20th century for 24 countries from all over the world, including Anglo-Saxon coun-
tries, Continental European countries, Mediterranean European countries, Nordic countries, Eastern
European countries, India, Mexico and Africa.
We nd that changes in inherited trust explain a substantial part of the changes in economic
development over the period 1935-2000, even when country-xed eects, past economic development
and changes in institutions are accounted for. The dierences in income per capita in developed
countries, relative to Sweden, are overwhelmingly explained by dierences in inherited trust. The
lag in income per capita in developing countries is mainly explained by past economic development
and time invariant factors, but trust also explains a signicant share of the backwardness of those
countries. We show that this result still holds when we look at other periods such as the 1910-2000
and when we control for the evolution of other institutions, cultural values, religion or education.
Although our paper combines ideas about trust and growth in an apparently novel way, it follows
2
a large literature on related topics. The rst related literature analyzes the impact of social capital,
including generalized trust, on various economic outcomes. Following Baneld (1958), Coleman (1988)
and Gambetta (1988), Putnam (1993) reinvigorated research on social capital by showing tremendous
dispersion in levels of trust and social capital across Italian regions as well as the ability of social capi-
tal to predict government performance. Knack and Keefer (1997) and La Porta et al. (1997) are early
empirical studies showing that social capital is correlated with economic outcomes in a cross-section
of countries. Platteau (2000) explores further this analysis with micro studies in developing countries.
Recent studies have further advanced this area. Guizo et al. show how trust can aect nancial devel-
opment (2004), economic exchanges (2009) and various economic outcomes such as entrepreneurship
(2006). Tabellini (2009) shows the relationship between historical variables, contemporaneous trust
and development in Europe. Tabellini (2009), Aghion et al (2008, 2009), Algan and Cahuc (2009) and
Bloom et al. (2007) analyze the relationship between trust and institutions. Zak and Knack (2001)
and Francois and Zabojnik (2005) provide theoretical models of the eect of social capital on economic
development.
The second related literature is about the transmission of cultural beliefs or values. Rice and
Feldman (1997) and Putnam (2000) show that the social capital of US-immigrants is correlated with
civic culture in the home country. Guiso et al. (2006) show that the level of trust of US-immigrants
is aected by the country of origin of their ancestors and highly correlated with trust in their home
countries. Guiso et al. (2007), Nunn and Wantchekon (2009) and Tabellini (2009) present evidence of
deep historical roots of contemporaneous variation in trust among regions of Europe or Africa. Bisin
and Verdier (2001), Tabellini (2008), and Guiso et al. (2008) focus on explicit models of cultural
transmission of preferences and beliefs within families. In the same vein, Guiliano (2007), Fernandez
(2007) and Fernandez and Fogli (2009) use the beliefs of immigrants as a proxy for the beliefs of
a home country. Fernandez (2007) uses attitudes toward women’s work in the home country as an
instrument for attitudes of US-immigrants. Fernandez and Fogli (2009) show that labor participation
of US-immigrant women is inuenced by the country of origin of their mothers. Algan and Cahuc
(2007) use inherited family values of US-immigrants as an instrument for family values in the source
country to explain cross-country employment heterogeneity.
The main conclusion of this literature is that values or beliefs such as trust have a persistent
component. This does not mean that these beliefs are completely invariant though. As shown by
Putnam (2000), social capital in general and trust in particular has declined dramatically in the
United States since World War II. Inglehart and Welzel (2005) document some changes in cultural
values in a cross-section of countries by exploiting the various waves of the World Values Survey.
At the theoretical level, Benabou and Tirole (2006) show how beliefs can evolve depending on the
institutional environment. Guiso et al. (2008) show how a temporary shock to the returns to trusting
3
can deeply change the level of trust. Our paper combines these dierent ideas by recognizing that a
component of trust can be inherited, but that trust can also evolve over long periods. The novelty of
our paper is to identify empirically the time variation in beliefs, and to relate this time variation in
beliefs to growth. We use the inherited trust of US immigrants to detect historical changes in inherited
trust in the home countries. This allows us to analyze the relations between changes in inherited trust
and changes in income per capita in the home countries.
The paper is organized as follows. Section 2 presents the estimation strategy and the data. The
evolution of inherited trust is estimated in section 3. The eect of inherited trust on economic devel-
opment is discussed in section 4. Section 5 provides robustness checks and section 6 concludes.
2 Estimation strategy and data description
2.1 Estimation of inherited trust
What is the impact of trust on macroeconomic performance? To answer this question, one has to deal
with the issue of endogeneity at stake in the estimation of the following equation
Yct =α0+α1Sct +α2Xct +Fc+Ft+εct,(1)
where Yct stands for income per capita in country cat period t.ThevariableSct measures the country
average of trust of individuals who live in country cat period t, conditional on their individual
characteristics such as age, gender, education, income, employment status or religious aliation. Xct
denotes a vector of time-varying characteristics of the country. This vector might include the past
economic development of the economy with the lagged values for income per capita or education.
It might also include the evolution of the political environment and of other cultural norms such as
religion. Fcstands for country xed eects capturing all other time invariant specic features such
as the legal origins or past institutions with long-lasting eects; Ftstands for period xed eects
common to all countries; εct denotes an error term. The inclusion of country xed eects ensures that
the correlation between economic performance and attitudes is not driven by unobservable country
time invariant specicfactors.
The problem with equation (1) is that contemporaneous trust is likely to be correlated with the
unobserved error term εct. For instance, individuals who live in a more secure environment are likely
to trust others more and to be more ecient. To tackle this issue, we need to explain how trust is
determined. Studies by Bisin and Verdier (2001), Bisin, Topa and Verdier (2004), Guiso, Sapienza
and Zingales (2008) and Tabellini (2008) stress the role of two main forces. A part of social attitudes
is shaped by the contemporaneous environment and another part is shaped by inherited beliefs from
4
earlier generations. This suggests positing the following model
Sct =γ0+γ1Sct1+γ2Xct +Φc+Φt+νct (2)
where Φcand Φtstand for country and time dummies respectively; Sct1denotes the country average
of trust of the previous generation in period t1;νct is an error term. In equation (2), it is assumed that
current trust of individuals of working age are determined by all factors likely to inuence economic
performance and by the level of trust of the previous generations. Note that the assumption that the
trust of previous generations are excluded from the economic performance equation (1) allows us to
identify, together with the assumption that εct Sct1,the parameters of the system of equations (1)
and (2). Data availability and the concern to proceed with periods separated by a sucient large gap
led us to consider, in the benchmark estimation of the model, two periods: 1935-1938 and 2000-2003.
Alternative periods are considered in the robustness checks section.
The estimation of the system of equations (1) and (2) raises two main concerns.
First, we do not have any information on Sct1,since standardized cross-country databases on the
level of trust of earlier generations are not available. At best, it is possible to go back only to the 1980s
to get a measure of trust in a cross-section of countries using the World Values Survey. To cope with
the lack of information on social attitudes of the previous generations, we proxy the inherited trust
of people living in country cby the trust that the descendants of US immigrants have inherited from
their ancestors coming from country c. More precisely, inherited trust is measured by the country
of origin xed eect in individual regressions of the contemporaneous attitudes of US descendants
of immigrants. This yields an estimate of the term γ1Sct1in equation (2), that we use as a proxy
for inherited trust. This strategy leads us to estimate a single equation of the form (1), where Sct
is replaced by our proxy of inherited attitudes. The coecient associated with inherited trust then
reects the correlation between inherited trust and contemporaneous income per capita.
Second, even if we have a good proxy for inherited trust, the correlation between inherited values
and contemporaneous economic outcomes can be interpreted as a causal eect from inherited trust to
contemporaneous outcomes only if these two variables are not co-determined by common factors. For
example, it is possible that changes in inherited trust and income per capita are driven by changes
in initial economic conditions, in institutions or in any other time varying factors. To deal with this
issue, we take two avenues. First, we control for other changes in the economic, political and social
environments. Second, we implement robusteness checks in which we consider long time lags between
inherited trust of US-immigrants and contemporaneous income per capita in the home country. It
thus becomes unlikely that changes in inherited trust are driven by changes in variables that could
directlyimpactbothinheritedtrustand contemporaneous economic outcomes.
5
2.2 Data description
Economic performance is measured by income per capita expressed in 1990 US dollars. We use the
Maddison database which covers the period 1820-2003.
Trust of individuals born in the United States are provided by the General Social Survey database
(GSS). This database covers the period 1972-2004 and provides information on the birth place and the
country of origin of the respondent’s forebears since 1977. The GSS variable for the country of origin
reads as follows: “From what countries or part of the world did your ancestors come?”. The individual
can report up to three countries of origin by order of preference. Two respondents out of three report
only one country of origin. We select the GSS ethnic variable that captures the country of origin to
which the respondent feels the closest to make the comparison between country of origin interpretable.
We have a large number of observations for at least 24 countries or continents. The country of origins
cover almost all European countries: Austria, Belgium, Czech Republic, Denmark, Finland, France,
Germany, Hungary, Ireland, Italy, Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden,
Switzerland, United Kingdom and Yugoslavia. The GSS database also reports information for Canada,
Mexico and India and the category African origins. We only present the country of origins displaying
at least more than 20 observations in our estimations. The number of observations is reported in
Table XVI.
We measure the path of cultural transmission of trust by using the waves of immigration. Respon-
dents are asked if they were born in the United States and how many of their parents and grand-parents
were born in the country. The answers to the question of parents’ birthplace are scaled 0 if both par-
ents are born in the US, 1 if only the mother was born in the US, and 2 if only the respondent’s father
was born in the country. The answers to the grand-parents’ birthplace are scaled from 0 to 4 indicating
the number of grandparents born in the US. This information makes it possible to disentangle four
potential waves of immigrations: fourth-generation Americans (more than 2 grand-parents born in
the US and all parents were born in the US), third-generation Americans (at least two grand-parents
immigrated to the US and all parents were born in the US), second-generation Americans (at least
one parent born abroad) and rst-generation Americans.
Trust is measured by the following question: “Generallyspeaking,wouldyousaythatmostpeople
can be trusted or that you need to be very careful in dealing with people?”. The answers are given on
a scale from 1 to 3, which corresponds to “Most people can be trusted”, “Can’t be too careful” and
“Depends”. We construct a trust indicator equal to one if the respondent answers that people can
be trusted and 0 if he considers that one cannot be too careful or that it depends. We group together
the two latter responses to make a clear separation between high trusting individuals as opposed to
moderate or low trusting ones. This will also allow a direct mapping with the trust question in the
6
World Values Survey (WVS). The results are hardly aected by the treatment of the answer “Depends”
in the GSS. As shown by Table XVI, the share of answers “Depends” is marginal for almost all country
of origins. We have run robustness checks by dropping the answers “Depends” or by grouping this
answer with the answer “Most people can be trusted”, with the same conclusions. The results are
reported in the Appendix.
Trust in the home country is measured by using the World Values Survey (WVS) database. The
WVS covers all the set of countries dened as potential country of origin in the GSS database. The
trust question in the WVS has exactly the same wording as that of of the GSS: “Generally speaking,
would you say that most people can be trusted or that you need to be very careful in dealing with
people?”. But the WVS only allows for two anwsers: 1 for : “Most people can be trusted”, and 0 for
“Can’t be too careful”. Table XVI reports the number of observations and the decomposition of the
trust question for the WVS. We select the wave 2000 of the WVS to provide a benchmark comparison
with inherited attitudes in 2000 in the GSS. We use the wave 1995 to get information for Switzerland
and Norway.
3 Inherited trust of US-immigrants and trust in the home country
3.1 Inherited trust
This section documents how we estimate the evolution of trust transmitted from the source country
over the 20th century. This analysis is based on the GSS. We have to specify the lag that we impose
between the inherited trust and the contemporaneous economic outcome at date T. Wetakeabench-
mark lag of 25 years, which implies that we focus on attitudes transmitted before the date T25.
We also assume a gap of 25 years between two generations. Accordingly, we focus on inherited trust
of: i) second generation Americans born before T25, since the parents of the second-generation
immigrated before T25; ii) third-generation Americans born before T25 + 25, since the grand-
parents of the third-generation born before Timmigrated before T25; and iii) fourth generation
Americans born before T25 + 50.2We document below the estimates of inherited trust for the
periods 1935-1938 and 2000-2003, with a minimum lag of 25 years between inherited trust and income
per capita. We look at dierent periods and lags structure in the robustness checks section and in the
Appendix.
We start by focusing on inherited trust in the two periods 1935-1938 and 2000-2003 (1935 and 2000
2Note that in the case of fourth-generation immigrants, we consider individuals born after date T. Nonetheless they
have inherited the attitudes prevailing before date T25. We consider dierent generations of immigration to get the
maximum of observation on inherited trust before date T25. But we show that our results still hold when we focus
on sub-groups of generation of immigration.
7
henceforth). We measure inherited trust for these periods by using the transmission pattern described
above. We assume that all people alive in a period may inuence the income per capita of the period.
Therefore, inherited trust in 1935-1938 are those of second-generation Americans born before 1910 (i.e.
whose parents arrived for sure one generation before 1935), of third generation Americans born before
1935 and of fourth generation Americans born before 1960. In the same way, the level of inherited
trust in 2000-2003 corresponds to the trust inherited by: second-generation Americans born between
1910 and 1975, by third generation born after 1935 and by fourth generation Americans born after
1960. This decomposition excludes any overlap in the inherited trust of the two groups. Table XVII
reports the number of observations for these groups. Table XIX reports the sample characteristics.
Table I reports the probit estimates of inherited trust for the period 1935 and 2000. We run a
single regression by grouping together the two periods and we interact the dummy period with the
country of origin dummy to distinguish inherited trust in 1935 and 2000. Trust inherited in 1935 by
the Swedish-Americans is used as the reference group. In addition to the country-of-ancestry dummies,
we control for age (age squared), sex, education, employment status, religion and the income category.
Thevariableincomevariesfrom1to12,ahigher value indicating a higher income category.3As
a robustness check, we have also included the education of the parents to control for the fact that
inherited trust might transit through parents’ human capital rather than through cultural transmisson.
The number of observations is lower, but without any change in the results. All estimations include
year dummies to control for specic temporal shocks. All standard errors are corrected for clustering
at the country level.
Column 1 reports the estimates for inherited trust in 1935, relative to trust inherited by Swedish-
Americans in 1935. Having forebears coming from a dierent country of origin than Sweden has a
statistically signicant eect on inherited trust. For some countries of origin like United Kingdom, the
eect is statistically even more signicant than the one found for the period 2000. This result suggests
that inherit trust is strongly persistent. The trust inherited in 1935 from Continental European
or Anglo-Saxon countries tends to be higher than that inherited from Sweden. The probability to
trust others is 2.5 percentage points higher for French-Americans, 2.8 percentage points higher for
British-Americans and slightly higher for German-Americans. Inherited trust in 1935 is also higher
for some Eastern European countries like Czech Republic or Hungary. In contrast, inherited trust
from Mediterranean countries, Latin American countries, Africa, China, India is lower than that of
Swedish-Americans in 1935.
Column 2 reports trust inherited in 2000 relative to trust inherited by Swedish-Americans in 1935.
Inherited trust displays substantial changes between the two periods. First, the Swedish-Americans
have inherited higher trust in 2000 relative to the period 1935. Second, inherited trust from Continental
3The GSS also reports information on total wealth, but for too few households to get a representative sample.
8
European countries, and to a lesser extent from UK, has deteriorated over the period. Trust inherited
in 2000 from French or German ancestors is 5.7 percentage points and 2.5 percentage points lower
respectively relative to trust inherited from Sweden in 1935. Inherited trust has decreased even more
among the immigrants from Eastern European countries and Mediterranean countries. In contrast,
inherited trust has increased for individuals with Nordic ancestors. The eect of other individual
characteristics are reported in Table II. Trust increases with age, education, and the level of income,
but religious aliation turns out to have no impact.
Explaining changes in inherited trust within countries is beyond the scope of our paper. The set
of potential candidates is quite wide. One might rst think about the role of national shocks such as
wars. The ancestors of the current US respondents are likely to have undergone very dierent national
crises. The ancestors who have transmitted their trust for the period 1935 have mainly migrated
before World Wars I and II. The social attitudes of immigrants from countries deeply aected by
these crisis, like France, Germany or Eastern European countries, might have deteriorated between
this period compared to descendants from Sweden, since this latter country is one of the few European
countries which was least aected by these traumatic events. This nding would be consistent with
those obtained by Alesina and Ferrara (2002) and Nunn and Wantchekon (2009) who show that a
history of traumatic experience is associated with low trust.
Other potential explanations of changes in trust might be linked to institutions or economic con-
ditions. Sweden was much poorer than other European countries at the end of the 19th century and
mass emigration to America became the only way to prevent famine and rebellion: over 1 percent of
the population emigrated annually during the 1880s. Besides, Sweden was marked in the early 1900s
by a world record for days lost in labor disputes and strong class conicts. This suggests a low level
of generalized trust. But the leaders ultimately reached a agreement that ended the labor conicts
and led to the creation of the Swedish welfare state. The same holds true for Denmark at the end
of the 19th century. In contrast, most Continental European, Eastern European and Mediteranean
countries were aected by the rise of totalitarisms in the 1930s, and Eastern European countries were
ruled by communist regimes after World War II. Such events might have deep eects on social capital.
Putnam (1993) stresses the long-term negative eect of authoritarian regimes and social capital, with
an application to the history of Italy. Alesina and Fuchs-Schuendeln (2007) show that communism
had deeply changed a wide set of beliefs by comparing East and West Germany. In the same vein,
Aghion et al. (2008), and Aghion et al. (2009) show that some political and economic institutions
might have crowded out trust in European countries relative to Nordic countries.
9
3.2 Correlation between inherited trust and trust in the home country
This section documents the relationship between inherited trust and trust in the home country. If
there is a cultural transmission of trust within families, we should nd a statistically signicant
correlation between inherited trust of the descendants of US-immigrants and trust in their country of
origin. Besides, if trust has evolved in the country of origin over the century, the correlation between
the trust inherited at the beginning of the 20th century and the level of trust in the home country
nowadays should be weaker.
We estimate the relationship between inherited trust and trust in the home country in the following
way. We run individual regressions on the trust question of the GSS as in the previous section. But we
replace the country of origin xed eect by the average trust in the home country, calculated from the
wave 2000 of the WVS. We run these estimates on the same samples and by using the same controls
as in the previous estimates.
Table III - Column 1 reports the results for the period 2000.4The correlation between inherited
trust in the US and trust in the home country is statistically signicant at the 1 percent level. Column
2 reports the results when we regress inherited trust in 1935 on trust in the country of origin in 2000.
The correlation is no longer statistically signicant. This result suggests that the trust transmitted
in 1935 from the source country was dierent from the level transmitted in 2000. Note that an
alternative interpretation of this weak correlation could be a convergence in inherited trust of US-
immigrants as the time spent in the host country increases. Yet the previous section has shown that
this explanation is unlikely since the coecients of the country of origin measuring inherited trust in
1935 were statistically highly signicant. Column 3 conrms this result by focusing on inherited trust
in 2000 for the sub-group of fourth generation immigrants (born after 1960). The correlation with
trust in the home country is statistically signicant at the 5 percent level.5
Figures 1 and 2 provide a complementary picture for this result by displaying the scatterplot of
trust in the home country in 2000 against inherited trust of US-immigrants for the periods 2000 and
4Table III presents benchmark estimates that group together dierent generations of immigration of dierent ages to
measure inherited trust for a given period. The Appendix reports estimates by sub-groups of waves of immigration.
5An additional interpretation could be that the selection of immigrants from the home countries varied over the
twentieth century, and that this weakens the relationship between trust in the home country and inherited trust of US
immigrants. In particular, the incentives for immigrating from Eastern European countries were likely to be dierent
before and after World War II. Changes in trust could thus be linked to changes in the sample selection of immigrants.
However we can get a sense of this potential concern by comparing trust in the home country and inherited trust in
the US during the same period 2000, the only period where trust and inherited trust can be observed jointly. Table
III shows that there is a strong correlation between trust in the source country and inherited trust of US immigrants
from their source country for this period. Moreover, Table III - Column 3 shows that for the period 2000, trust in the
source country is correlated not only with trust inherited by second-generation immigrants, but also with trust inherited
by fourth generation immigrants whose forebears arrived in the US much before those of second generation immigrants.
This result suggests that the changing time pattern of the selection of immigrants is not a key issue in our analysis.
10
1935 respectively. Swedes and descendants of Swedish-immigrants of the corresponding periods are
taken as the reference group. We control for age, gender, education, income, employment status and
religious aliation. The correlation between trust in the home country in 2000 and inherited trust in
2000 of US-immigrants is fairly high. The only outlier is India and the coecient of determination is
0.22. In contrast, no clear correlation pattern appears in Figure 2 when we look at inherited trust in
1935. Most of the continental European countries or Anglo-Saxon countries display higher inherited
trust relative to Sweden in 1935, while trust in the source country is lagging behind trust in Sweden
in 2000.
A last important question is whether these dierent correlations are just a product of luck or if
they truly capture inherited values from the country of origin. To address this issue, one can run a
regression on the GSS of the trust levels of, for example, Italian Americans, on the average trust of
Chinese in China calculated with the WVS 2000. If one generalizes this test to all countries of origin
and nd a positive and statistically signicant correlation between inherited trust from country iand
contemporaneous trust in country i06=i, one would suspect spurious correlation in these estimates.
To explore further this issue, we implement the following test. We draw randomly from a uniform
distribution the home country of the US-immigrants. We then regress the individual trust question in
the GSS on the average trust of a home country picked up randomly from the group of 24 potential
source countries. We still control for age, education, gender, employment status, income category and
religious aliation.
Table IV reports the result for inherited trust in 2000 and 1935. The correlation turns out to be
negative and close to zero for the period 2000, and slightly positive for the period 1935. In both cases,
the correlations are not statistically signicant, suggesting that our previous estimates were not driven
by spurious correlation.
4Theeect of inherited trust on growth
This section presents the estimates of the impact of inherited trust on growth. We rst analyze the
cross-country relationship between inherited trust and income per capita. Then, we focus on the eect
of changes in inherited trust on changes in income per capita over time.
4.1 Cross-country correlations between inherited trust and income per capita
We begin with cross-country correlation between inherited trust and income per capita in the countries
of origin. Figures 3 and 4 show the correlation in 1935 and in 2000. The y-axis is the income gap
relative to Sweden for each period. The x-axis reports inherited trust measured by the marginal
probit coecient associated with the country of origin xed eect in 1935 and 2000 in the GSS. We
11
Afri
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Fra
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India
Ire
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Mx
Nth
Nw
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Pt
Rus
Sp
Swd
Switz
Uk
Youg
-.3 -.2 -.1 0.1
Trust in the home country in 2000
-.4 -.2 0.2
Inherited trust in 2000
R²=0.22
Figure 1: Correlation between trust in the home country in 2000 and inherited trust of descendants
of US-immigrants for the period 2000. Source: WVS 2000 and GSS 1977-2004.
12
Afri
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Bg
Cd
Czr
Dk
Fin
Fra
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Hg
India
Ire
Ita
Mx
Nth
Nw
Pol
Pt Rus
Sp
Swd
SwitzUk
Youg
-.3 -.2 -.1 0.1
Trust in the home country in 2000
-.3 -.2 -.1 0.1 .2
Inherited trust in 1935
R²=0.06
Figure 2: Correlation between trust in the home country in 2000 and inherited trust of descendants
of US-immigrants for the period 1935. Source: WVS 2000 and GSS 1977-2004.
13
run these regressions separately for 1935 and 2000, taking the Swedish-Americans in 1935 and 2000
as the reference group respectively.
Figure 3 shows that the cross-country correlation between inherited trust and income per capita
in 1935 is positive and steady. The coecient of determination is 0.33. Most continental European
countries, Nordic countries and UK show both higher or equal level of inherited trust and higher
income per capita than Sweden. Mediterranean countries, India, and Africa were already lagging
behind Sweden. The only outlier is Yugoslavia, displaying much higher level of inherited trust than
Sweden in 1935. The coecient of determination is equal 0.58 without Yugoslavia, and 0.36 when
excluding also Africa and India.
Figure 4 shows that the same steady relationship holds for inherited trust and income per capita in
2000. More than two thirds of the cross-country heterogeneity in income per capita relative to Sweden
is associated with dierences in inherited trust. When Africa and India are excluded, the coecient
of determination is still 0.47.
Table V reports the corresponding OLS regression. Column 1 reports the bottom down regression
without any controls. The correlation between inherited trust and income per capita is statistically
signicant at the one percent level and is economically sizeable. Inherited trust explains more than
one-third of the cross-country heterogeneity in economic development (R2=0.38).
Column 2 controls for lagged income per capita in 1870 and 1930, using Maddison’s database.
The strong dependence of current economic development on initial economic conditions is naturally
a well-established fact. Moreover, the initial economic development in the home country at the time
immigration took place could codetermine both the current income per capita in the home country
and the inherited trust of US immigrants’ descendants. Column 2 shows that the correlation between
inherited trust and income per capita is lowered by almost half when controlling for the lagged value
of income per capita. But the correlation is still statistically signicant at the one percent level, and
the impact is still economically sizeable as discussed below.
Column 3 adds contemporaneous political institutions using the synthetic variable Polity2 from
the Polity IV data set. This variable is originally scaled between -10 and 10. Higher values correspond
to more democratic political institutions. Since all variables in our regression are measured relative
to Sweden, we rescale the polity2 variable between 0 and 20 and look at the dierence with Sweden.
We take the average of this indicator over the periods 1935-1938 and 2000-2004. Data are missing for
India. The correlation between inherited trust and income per capita is still statistically signicant at
the 1 percent level.
Column 4 excludes Africa and India, which appear as potential outliers in the previous graphs.
Inherited trust remains statistically signicant at the 1 percent level and the eect is of the same order
of magnitude.
14
Afri
Aut
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Cd
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Dk
Fin
Fra
Ger
Hg
India
Ire
Ita
Mx
Nth
Nw
Pol
Pt Rus
Sp
Swd
Switz
Uk
Youg
-4000 -2000 02000
Income per capita relative to Sweden in 1935
-.3 -.2 -.1 0.1 .2
Inherited trust in 1935
R²=0.33
Figure 3: Correlation between income per capita and inherited trust in 1935, relative to Sweden.
Sources: Maddison database and GSS 1977-2004.
15
Afri
Aut Bg
Cd
Czr
Dk
Fin
Fra
Ger
Hg
India
Ire
Ita
Mx
Nth
Nw
Pol
Pt
Rus
Sp
Swd Switz
Uk
Youg
-20000 -15000 -10000 -5000 05000
Income per capita relative to Sweden in 2000
-.4 -.3 -.2 -.1 0.1
Inherited trust in 2000
R²=0.64
Figure 4: Correlation between income per capita and inherited trust in 2000, relative to Sweden.
Sources: Maddison database and GSS 1977-2004.
16
4.2 Changes in inherited trust and changes in income per capita
We turn to the correlation between changes in inherited trust and changes in income per capita over
time. Figure 5 reports a scatterplot of the changes in income per capita between 1935 and 2000 against
the changes in inherited trust between the same periods, relative to Sweden. The change in inherited
trust is measured by the change in the value of the country of origin xed eects in separate regressions
on the trust question for the periods 1935 and 2000. The correlation is positive and steady, one third
of the change in income per capita is associated with change in inherited trust.
Table VI reports the within eect of inherited trust on economic development controlling for
country xed eects. Column 1 reports the bottom down estimates without additional control. Change
in inherited trust is strongly correlated with change in income per capita. Column 2 controls for
changes in initial income per capita. The coecient associated with inherited trust is lowered but still
signicant at the one percent level. Column 3 checks for potential outliers by excluding Africa. We
have also checked the results when Nordic countries (Denmark, Finland, Norway) are excluded, with
the same conclusion. Column 5 controls for political institutions. Column 6 report the results using
an alternative measure of income per capita in 1935 and 2003. To smooth out short-run uctuations,
we also calculated income per capita as a ten years average (instead of four years average) 1928-1938
and 1994-2004 . For each specication, the correlation between change in inherited trust and change
in income per capita is signicant at the 1 percent level.
Quantitative eects of inherited trust
The results displayed in Table VI imply that the impact of inherited trust on income per capita
is economically sizeable. Figure 6 displays the change in income per capita in period 2000-2003 that
countries would have experienced if the level of inherited trust in a given country had been the same
as trust inherited from Sweden. This analysis is based on the fully-edge estimates reported in Table
VI - Column 5 for which country xed eects, lagged value of GDP per capita and contemporaneous
political environment are controlled. GDP per capita in 2000 would have been increased by more
than 546 percent in Africa (not reported) if the level of inherited trust had been the same as inherited
trust from Sweden. Africa and poor countries are obviously extreme cases. It is well documented that
these developing countries are lacking interpersonal trust. As Baneld (1958), Fafchamps (1996) or
Platteau (2000) argued, traditional societies are characterized by pervasive intra-group trust but low
inter-group trust. The functioning of markets is drastically limited when trust is circumscribed to
small groups. Figure 6 shows that inherited trust also has a non-negligible impact on GDP per capita
in Eastern European countries and Mexico. Income per capita would have increased by 64 percent in
Russia, 61 percent in Mexico, 51 percent in Yugoslavia, 25 percent in Czech Republic and 23 percent
in Hungary, had these country have inherited the same level of trust as Sweden. The eect, if less
17
important, is also sizeable in more developed countries. Income per capita would have been up by 18.5
percent in Italy, 13.2 percent in France, 10.9 percent in Germany and 8.7 percent in United Kingdom
if these countries had the same level of inherited trust as Sweden.
The relative role of convergence, time invariant factors and inherited trust
What is the impact of inherited trust relative to the economic and political environments and
to time-invariant factors? One thing we know about growth is that it is a dynamic process and
that changes prior to 1935 may be associated with long periods of transition dynamics, so that it is
very misleading to think that changes in outcomes between 1935 and 2000 need to be associated with
changes in underlying factors only after 1935. Accordingly, our estimates control for the lagged income
per capita in the 1870s and the 1930s for explaining income per capita in 1935 and 2000 respectively.
We can thus calculate the predicted changes in income per capita if the countries were starting from
the same initial economic development as Sweden, assuming as given other time-invariant institutions,
social attitudes and political institutions.
Figure 7 shows the predicted increase in income per capita in 2000. Africa would have an income
per capita 596 percent higher while Russia or Mexico would have an income per capita 128 percent
and 83 percent higher. But countries which used to be more developed than Sweden, like United
Kingdom or France, would have experienced a drop in income per capita by 25 percent and 6.6
percent respectively.
Figure 8 reports the contribution of time invariant factors. We calculate the predicted increase in
income per capita if the countries had the same country xed eect as Sweden. Africa would have an
income per capita 281 percent higher. Eastern European countries would have undergone an increase
by 160 percent in Yugoslavia, 129 percent in Russia, 73 percent in Hungary and 62 percent in Poland.
Mexico would have increased its income per capita by 82 percent. The eect of time invariant factors
is thus of the same order of magnitude as initial economic development for this set of countries and
three times as big as the eect of inherited trust in general. The role of time invariant factors is much
lower among more advanced European countries. For example the income per capita would have ben
up only by 2 or 3 percent in Mediterranean countries like Spain and Italy. Income per capita would
have been even lower in France.
As a conclusion, the changes in income per capita in developed countries, relative to Sweden, are
overwhelmingly explained by dierences in inherited trust. This result can be understood by the fact
that these countries have economic enrivonments and political institutions close to those of Sweden.
The main dierences are explained by the heterogeneity in trust. Initial economic factors and invariant
factors explain in general most of the dierences in income per capita of developing countries relative
to Sweden. This result is consistent with the growth literature stressing the role of initial economic
18
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India
Ire
Ita
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Pt
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Sp
Swd Switz
Uk
Youg
-15000 -10000 -5000 05000
Change in Income relative to Sweden: 2000-1935
-.3 -.2 -.1 0.1
Change in Inherited trust relative to Sweden: 2000-1935
R²=0.34
Figure 5: Correlation between change in income per capita and change in inherited trust between 2000
and 1935, relative to Sweden. Sources: Maddison database and GSS 1977-2004.
development and of invariant factors, such as colonial institutions (Acemoglu et al., 2001), legal origins
(Laporta et al., 2008) or georgraphy (Sachs, 2005). But our results show that the evolution of trust
has also an economically tremendous impact on income dierences in these countries, which has not
been accounted for so far. In contrast, changes in political institutions do not play a signicant role
when inherited trust and initial economic development are controlled for.6The next section check for
the robustness of these results by including other time-varying factors such as religion, education or
other inherited cultural values and by addressing the issue of omitted variables.
5 Robustness checks
The validity of our approach relies on the assumption that the relationship between inherited trust and
contemporaneous income per capita is not driven by omitted variables. Even if the previous section
6The variable political institution is always associated with a negative sign since Sweden displays the highest value
of Polity IV in 1935 and 2000 and the variable is expressed relative to Sweden.
19
-20 020 40 60
Variation in GDP per capita if same inherited trust as Sweden (%)
Fin
Nw
Switz
Dk
Bg
Sp
Cd
Nth
Aut
Ire
Uk
Ger
Fra
Pt
Ita
Hg
Czr
Pol
Youg
Mx
Rus
Figure 6: Predicted variations in GDP per capita in 2000 if inherited trust had been the same as inher-
ited trust from Sweden, controlling for lagged GDP per capita, contemporaneous political environment
and country-xed eects
-50 050 100 150
Variation in GDP per capita if same initial economic development as Sweden (%)
Switz
Uk
Nth
Dk
Bg
Cd
Fra
Ger
Nw
Aut
Ire
Ita
Fin
Sp
Czr
Pt
Hg
Pol
Mx
Rus
Youg
Figure 7: Predicted variations in GDP per capita in period 2000 if GDP per capita in the 1930s had
been the same as in Sweden, controlling for inherited trust, contemporaneous political environment
and country-xed eects
20
050 100 150
Variation in GDP per capita if same country fixed effect as Sweden (%)
Ire
Cd
Nw
Fra
Dk
Sp
Nth
Ita
Aut
Fin
Uk
Switz
Ger
Bg
Pt
Czr
Pol
Hg
Mx
Rus
Youg
Figure 8: Predicted variations in GDP per capita in 2000 if the country-xed eect had been the same
as that of Sweden.
imposes a minimum lag of 25 years between inherited trust and income per capita, and control for
both time-invariant factors, past economic environment and political institutions, the exogeneity of
inherited trust might still be of a concern. This section provides various robustness checks to address
this issue.
5.1 Longer generation gaps
In the main section, we deal with omitted variables by including country xed eects in the income per
capita equation. This does not, however, completely solve the concern of omitted variables because
unobservable time-varying components might be correlated with both changes in inherited trust and
changes in income per capita in each country. One may think of specic time-varying factors aecting
both inherited trust in the host country and income per capita in the home country.
We deal with this issue by increasing the lag between inherited trust and contemporary income
per capita. This makes it less likely that unobservable time-varying component could drive changes in
inherited trust and current income per capita in the source country. The previous estimates assume a
lag of at least one generation, namely at least 25 years between inherited trust and contemporaneous
income per capita. We now increase this lag to two generations, which implies a gap of at least 50
years. This analysis is run for the periods 1935 and 2000. In the appendix, we increase the lag up to
three generations, implying a gap of at least 75 years. Because of the limits of the data set between
21
1935-2000, we use the period 1950-2000 to explore further the eect of a gap of three generations, as
shown in the appendix.
According to our previous estimation strategy, imposing a minimum lag of 50 years between the
ancestors’ wave of immigration and contemporaneous income per capita leads us to select the following
two groups. To explain the income per capita in 1935, we select second-generation descendants of the
immigrants born before 1885, third generation descendants of the immigrants born before 1910 and
fourth generation descendants of the immigrants born before 1935. For the period 2000, we focus
on the attitudes of second-generation US-immigrants born before 1950 (and after 1885 to avoid any
overlap between these groups of second-generation immigrants), third-generation immigrants born
after 1910 (and before 1975) and fourth generation born between after 1935 (and before 2000). We
only select countries of origin with more than 20 observations in the individual regressions on the
trust question, leading us to focus on 16 countries of origin. The samples of the dierent groups are
reported in Tables XVIII and XIX. Inherited trust is still measured by running probit estimates on
the GSS trust question and controlling for age, education, gender, income, employment and religion.
Inherited attitudes of Swedish-Americans in 1935 are taken as the reference group.
Figures 9 and 10 report the correlation between income per capita and inherited trust when we
impose a lag of at least 50 years between the inherited trust of the US-immigrants’ ancestors and income
per capita in the home country. The correlation remains steady, the coecient of determination being
0.32 and 0.70 for the periods 1935 and 2000 respectively.
Table VII reports the corresponding OLS regressions. Column 1 reports the results for the cross-
country estimates. Column 2 shows the within estimates without any control. Column 3 includes
the lagged income per capita and the current political constraint. The coecient associated with
inherited trust is statistically signicant at the one percent level in cross-country and time variation.
The correlation between inherited trust and income per capita remains statistically signicant at the
1 percent level for all specications.
This implies that the eect inherited trust on income per capita remains sizeable, even if it becomes
lower compared to the previous estimates with a minimum lag of 25 years. Among countries like
Mexico, Czech Republic or Poland, the income per capita in 2000 would have increased by 34.3
percent, 21.4 percent and 22.1 percent respectively if these countries had inherited the same trust as
that of Sweden. The eect remains signicant also for more developed countries like Italy or France,
whose income per capita would have been up by 12.5 percent and 5 percent respectively.
5.2 Longer period gaps: income per capita between 1910 and 2000
To make sure that our previous results do not rely on specic features of the period 1935-2000, we look
at dierent periods. In particular we consider a wider gap by focusing on income per capita in 1910
22
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Nth
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Pol
Sp
Swd
Switz
Uk
-3000 -2000 -1000 01000 2000
Income per capita relative to Sweden in 1935
-.2 -.1 0.1 .2 .3
Inherited trust in 1935 - Lag 50 years
R²=0.32
Figure 9: Correlation between income per capita and inherited trust in 1935, relative to Sweden.
Minimum 50 years lag between ancestors’ immigration wave and contemporaneous income per capita.
Sources: Maddison database and GSS 1977-2004.
23
Afri
Cd Dk
Fra
Ger
Ire
Ita
Mx
Nth
Nw
Pol
Sp
Swd
Switz
Uk
-20000 -15000 -10000 -5000 05000
Income per capita relative to Sweden in 2000
-.3 -.2 -.1 0.1
Inherited trust in 2000 - Lag 50 years
R²=0.70
Figure 10: Correlation between income per capita and inherited trust in 2000, relative to Sweden.
Minimum 50 years lag between ancestors’ immigration wave and contemporaneous income per capita.
Sources: Maddison database and GSS 1977-2004.
24
and 2000. These two periods are separated by the main major events of the 20th century, including
the two World Wars, the 1929 crisis, and the emergence of conicting ideologies in the world. Besides,
the period 1910 provides us with enough observations to estimate inherited attitudes from almost all
countries.
Inherited trust in 1910
We estimate inherited attitudes in 1910 by using exactly the same cultural transmission model
as above. To get enough observations for the period 1910, we use a lag of at least 25 years between
inherited attitudes and contemporaneous income per capita. We focus on inherited trust of second
generation individuals born before 1885, third-generation born before 1910, and fourth generation
born before 1935. Inherited attitudes in 2000 are similar to that estimated in the previous section.
The number of observations for these two populations are reported in Table XVIII. The sample of
individual characteristics are reported in Table XIX. We only select countries of origin with more than
20 observations in the individual regressions on the trust question. This leads to work with a sample
of 15 countries per period in the macroeconomic estimates of income per capita.
Inherited trust is measured by running probit estimates for the periods 1910 and 2000 and by con-
trolling for age, education, gender, income, employment and religion. Inherited attitudes of Swedish-
Americans in 1910 are taken as the reference group. The coecients are reported in Table VIII and
standard errors are clustered at the country level. Figure 11 reports the marginal eects associated
with the country of origin dummies. The gap in inherited trust between the periods 1910 and 2000 is
even sharper than the one previously found between the periods 1935 and 2000. Among the descen-
dants of early immigrants, the level of trust inherited from France, Germany and United Kingdom
was much higher than that transmitted from Sweden in 1910. Inherited trust from France and UK
were 8.8 percentage points and 9.4 percentage points higher relative to Swedish-immigrants. The only
countries of origin from which inherited trust in 1910 is lower than that of Sweden are Africa, Italy
and Spain. The eect of the country of origin associated with inherited trust in 1910 is almost always
statistically signicant at the one percent level. Strikingly, British, French or German descendants of
immigrants have more signicant dierences in inherited trust, relative the descendants of Swedish
immigrants, in 1910 than in 2000.
Inherited trust and economic development between 1910 and 2000
Figure 12 reports the correlation between inherited trust and income per capita in 1910, relative
to Sweden. The correlation is positive and steady, the coecient of determination is equal to 0.56.
European continental countries like France, Germany and Netherlands, and Anglo-Saxon countries
like UK were more economically advanced and with higher social attitudes than Sweden by that time.
25
-.2 -.1 0.1 .2 .3
2000
1910
Uk
Switz
Swd
Sp
Pol
Nw
Nth
Ita
Ire
Ger
Fra
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Cd
Afri
Uk
Switz
Swd
Sp
Pol
Nw
Nth
Ita
Ire
Ger
Fra
Dk
Czr
Cd
Afri
Figure 11: Marginal eect of the country of origin on trust for the periods 1910 and 2000. Reference
group: Swedish-Americans for the period 1910. GSS 1977-2004.
26
Afri
Cd
Czr
Dk
Fra
Ger
Ire
Ita
Nth
Pol
Sp
Swd
Switz
Uk
-2000 -1000 01000 2000
Income per capita relative to Sweden in 1910
-.2 -.1 0.1 .2
Inherited trust in 1910
R²=0.56
Figure 12: Correlation between income per capita and inherited trust in 1910, relative to Sweden.
Sources: Maddison database and GSS 1977-2004.
In contrast, Mediterranean countries were already trailing behind Sweden in terms of both economic
development and inherited trust.
Table IX reports the regressions including both periods 1910 and 2000 at the cross-country level.
Column 1 shows the bottom down regression without additional controls. Column 2 includes lagged
income per capita in 1870 and 1930. Column 3 adds contemporaneous values of political institutions
(averages over the period 1910-1913 and 2000-2003), all measured relative to Sweden.
Table X reports the correlation between change in inherited trust and change in income per capita
between 1910 and 2000 by controlling for country xed eects. Column 4 shows a statistically sig-
nicant and economically sizeable relationship. Column 5 includes the lagged value of income per
capita. Column 6 includes contemporaneous political institutions. Column 7 excludes Africa. For
each specication, the eect of inherited trust on income per capita is signicant at the one percent
level and the eect is of the same magnitude as the one found for the period 1935-2000. These
ndings suggest that our results are robust with respect to the issue of omitted time-varying factors.
We provide additional tests below.
27
5.3 Additional controls
We can also check for omitted variables by including additional controls. Our previous regressions
control for both time-invariant country eects and time-varying political and economic factors. But it
might be the case that changes in inherited trust capture changes in more general cultural attitudes or
social norms. We allow for this possibility by looking at other cultural attitudes that might matter for
explaining growth. We show the result for the periods 1935 and 2000, when imposing a minimum lag
of 25 years in inherited attitudes, since these periods provide the maximum number of observations.
We have run the regressions for the periods 1910-2000 and 1935-2000, with a lag of at least 50 years
in inherited attitudes. These estimates yield the same conclusions.
We rst include additional measures of social attitudes by controlling for religion and education.
We measure the share of non-religious persons per country in the 1900s and 2000s by using the Barro-
McCleary database on religion. We include the measure of fractionalization in religious groups for
this period, measured by the Herndal index. Besides, we also control for an historical measure of
education in the country of origin by measuring primary school enrollment, taken from Benavot and
Riddle (1988). We use the country level in 1870-75 and 1935-1940, and express school enrollment
relative to Sweden.
Second, we look at the evolution of other inherited attitudes toward work, family, the government
and business. We measure these attitudes by using the GSS and estimating their inherited component
in 1935 and 2000. We measure the belief of the respondent regarding important driving forces of
success in life by using the GSS question: “Some people say that people get ahead by their own hard
work; others say that lucky breaks or help from other people are more important”. The answers are
given on a scale of 1 to 3, which correspond to “Hard work most important”, “Hard work and luck
equally important”, “Luck most important”. We create a variable equal to 1 if the individual believes
in hard work and to 0 otherwise. We also look at traditional family values regarding gender roles
with the question “Do you approve or disapprove of a married woman earning money in business or
industry if she has a husband capable of supporting her?”. The answer is a dummy variable equal to
1 if the respondent approves and to 0 otherwise. The main question on the role of government in the
GSS reads “Government should do something to reduce income dierences between rich and poor or
government should not concern itself with income dierences”. The answers are scaled from 1 to 7,
lower scores indicating preference for government intervention. We measure attitudes toward business
by using the following question: “Do you have a great deal of condence, only some condence, or
hardly any condence at all in major companies”. We still measure inherited attitudes relative to
Swedish-American in 1935 and 2000 by running probit estimates on the two periods and controlling
for age, gender, education, income, employment status and religion.
28
Table XI reports the eect of changes in inherited trust when we include other inherited social
attitudes. Column 1 includes inherited attitudes towards work, Column 2 includes inherited condence
in business, Column 3 includes inherited attitudes in favor of government intervention to reduce
inequality and Column 4 controls for inherited attitudes in favor of working women. None of the
correlations between these inherited attitudes and income per capita is statistically signicant. In
contrast, changes in inherited trust remain statistically signicant at the 1 or 5 percent and the eect
is still sizeable. Column 5 includes all the attitudes in a single regression. Inherited trust becomes
statistically signicant at the 10 percent level. But none of the other variables, including lagged income
per capita, is statistically signicant, suggesting data limitation.
Table XII reports the results when we control for social or cultural changes in the home country.
Columns 1 to 3 include changes in the shares of educated people, of nonreligious persons, and of
religious fractionalization respectively. All variables are calculated relative to Sweden. Column 4
includes all the controls taken together. For each specication, the correlation between changes in
inherited trust and changes in income per capital remains statistically signicant at the 1 or 5 percent,
and the coecient is of the same order of magnitude.
6Conclusion
This paper provides a new empirical strategy to uncover the causal eect of trust on growth. We
track changes in trust levels inherited by dierent generations of Americans from the countries of their
immigrant forbearers as a measure of the evolution of trust in those source countries. By using this
inherited component of trust and its time variation, we are able to isolate the specicimpactoftrust
on economic development relative to other traditional candidates — like institutions and geography
— captured by the country xed eects. Inherited trust turns out to explain a signicant share of
the economic backwardness of developing countries and an important share of economic dierences
between developed countries over the 20th century.
This paper focuses on the economic consequences of changes in inherited trust. A remaining
question is the underlying causes for such changes. The 20th century is full of potential candidates,
including the two World Wars, the economic crisis of the 1930s, the emergence of totalitarianism and
communism as opposed to the emergence of social democracies and cooperative social dialogue. These
events have had heterogeneous eects across generations and countries. The link between such events
and changes in trust remains to be explored, in lines with, among others, Alesina and Fuchs-Schuendeln
(2007) and Aghion et al. (2008, 2010).
29
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33
AAppendix
A.1 Decomposition of inherited trust by wave of immigration and age
In the benchmark estimates, we group together dierent generations of immigration of dierent ages to analyze
the correlation between inherited trust of US-immigrants and trust in the country of origin. In this appendix we
assess the robustness of this correlation by decomposing by sub-groups the inherited trust of US-immigrants for
the periods 1935 and 2000. We estimate the correlation with trust in the home country by replacing the country
of origin xed eect by the average trust in the source country, measured by the WVS 2000. These estimates are
run on the GSS over the period 1977-2004, as in the main section. In the benchmark regressions, the inherited
trust for the period 1935 corresponds to that of second generation born before 1910, third generation born before
1935 and fourth generation born before 1960. Here, we run the estimates for inherited trust in 1935 separately
on the two sub-groups of second and third generation immigrants on one hand, and on the sub-group of fourth
generation on the other hand. Table XIII - Columns 1 and 2 show that no correlation shows up between trust
of US-immigrants belonging to the dierent sub-groups of inherited trust in 1935 and trust in the home country
in 2000.
Regarding the inherited trust for the period 2000, the benchmark regressions above include the second-
generation Americans born between 1910 and 1975, the third generation born after 1935 and the fourth gen-
eration Americans born after 1960. We now propose to distinguish the two sub-groups of second and third
generation immigrants on one hand, and the sub-group of fourth generation on the other hand. Table XIII
- Column 3 and 4 show the correlation between inherited trust in 2000 and and trust in the home country
by sub-groups. The correlation is statistically signicant at the 1 and 5 percent level, consistently with the
aggregate group of inherited trust in 2000.
A.2 Trust indicator
Table XIV reports the eect of inherited trust on income per capita when we use dierent measures of the trust
indicator. The trust variable in the GSS takes on three values: “Most people can be trusted”, “Depends” and
“Can’t be too carefull”. In the main section, we group together the answers “Depends” and “Can’t be too
carefull”. Table XIV - Column 1 reports the results using the original trust variable, Trust1, equal to 3 for
“Most people can be trusted”, 2 for “Depends” and 1 for “Can’t be too carefull”. The right hand side variable
corresponds to the coecients of the country of origin, estimated with ordered probit regression on the original
trust variable at the individual level. Table XIV - Column 2 reports the results when we use the trust dummy,
Trust2, equal to 1 for “Most people can be trusted” and 0 for “Can’t be too carefull”. In this case, the answers
“Depends” are dropped. The right hand side variable corresponds to the coecients of the country of origin,
estimated with (marginal) probit regression on the variable Trust2 at the individual level. Table XIV - Column
34
3 reports the results when we use the trust dummy, Trust3, equal to 1 for “Most people can be trusted” and
“Depends” and 0 for “Can’t be too carefull”. The right hand side variable corresponds to the coecients of the
country of origin, estimated with (marginal) probit regression on the variable Trust3 at the individual level.
For all specications, the impact of inherited trust on income per capita is statistically signicant at the
1 percent level. The coecients associated with inherited trust for the variables trust2 and trust3 are of the
same order as the one found in the main section. The coecient associated with inherited trust for the variable
trust1 is dierent and no longer interpretable in percentage variation since the variable trust1 comes from
ordered probit estimates.
35
A.3 Generation lag of 75 years
This appendix assesses the impact of inherited trust on income per capita when we impose a minimum lag
of three generations, which corresponds to 75 years, between these two variables. To get enough observations
for inherited trust, this analysis required working with two closer periods for income per capita than in our
benchmark case. We consider the periods 1950 and 2000. The income per capita in 1950 is measured as an
average between 1949 and 1953.
Following our estimation strategy with a lag of 75 years for inherited trust, income per capita in 1950
is explained by inherited trust of second-generation US-immigrants born before 1885, third-generation born
before 1910 and fourth-generation born before 1935. Income per capita in 2000 is explained by inherited trust
of second-generation immigrants born before 1925 and after 1885, third-generation immigrants born before 1950
and after 1910, and fourth-generation immigrants born before 1975 and after 1935 (to avoid an overlap with
inherited attitudes in 1950). We have more than 15 observations per country of origin for the period 1950 for
the following 17 countries or continents: Africa, Canada, Czech Republic, Denmark, France, Germany, Ireland,
Italy, Mexico, Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, and United Kingdom.
Table XV reports the impact of inherited trust on income per capita in 1950 and 2000. Column 1 and 2
report the results for between and within regressions without additional controls. Column 3 shows the within
estimates controlling for lagged income per capita and political institutions in 1950 and 2000. The impact of
inherited trust on income per capita is statistically signicant at the 1 percent level for each specication.
36
TABLE I - INHERITED TRUST IN 1935 AND 2000
Dependent variables
(1) Inherited trust
in 1935
(2) Inherited trust
in 2000
CoeStd Error CoeStd Error
Country of origin Swedish ancestors - 1935 : Reference
Sweden .031*** (.006)
Africa -.268*** (.002) -.289*** (.006)
Austria .038*** (.005) .019*(.010)
Belgium .060*** (.012) .123*** (.022)
Canada -.017 (.011) .030*(.015)
Czech Republic .011 (.008) -.042*** (.009)
Denmark .038*** (.002) .111*** (.007)
Finland -.060*** (.002) .177*** (.003)
France .024*** (.005) -.057*** (.011)
Germany .006*** (.002) -.025** (.010)
Hungary .107*** (.005) .015 (.010)
India -.100*** (.007) -.441*** (.022)
Ireland .015*** (.004) -.036*** (.013)
Italy -.068*** (.011) -.100*** (.015)
Mexico .100*** (.012) -.135*** (.013)
Netherlands -.064*** (.003) .018*** (.007)
Norway .139*** (.001) .125*** (.006)
Poland .012 (.013) -.062*** (.013)
Portugal -.085*** (.008) .006 (.012)
Russia -.076*** (.009) -.050*** (.008)
Spain -.075*** (.008) .056*** (.016)
Switzerland .056*** (.002) .073*** (.010)
United Kingdom .025*** (.001) -.017*(.010)
Yugoslavia .334*** (.010) -.084*** (.016)
Pseudo-R2.078
Observations 11577
Notes: The dependent variable is the level of trust inherited by US-immigrants from the periods 1935 and
2000. Trust is measured from the answer to the question: “Generally speaking, would you say that most people
can be trusted or that you need to be very careful in dealing with people?”. The answers are given on a scale from
1 to 3, which corresponds to “Most people can be trusted”, “Can’t be too careful” and “Depends”. The trust
indicator equal to 1 if the respondent answers that people can be trusted and 0 if he considers that one cannot be
too careful or that it depends. Additional controls: age, age (square), gender, education, income, employment
status and religion. Marginal probit regressions with robust standard errors clustered at the country level.
Coecient is statistically dierent from 0 at the *** 1%, ** 5% and * 10% level.
Source :General Social Survey 1977-2004.
37
TABLE II - EFFECTS OF INDIVIDUAL CHARACTERISTICS ON TRUST
Dependent variable:
Inherited trust in the US
Controls CoeStd Error
Age .008*** (.001)
Age2 -.000*** (.000)
Men .026*** (.008)
Education .035*** (.001)
Income category .011*** (.001)
Employed .010 (.015)
Unemployed -.043*** (.021)
Catholic .031 (.024)
Protestant .010 (.012)
Notes: The dependent variable is the level of trust inherited by US-immigrants for the period 1935 and
2000. The Table presents the coecients associated with the individual characteristics of the marginal probit
regressions presented in Table I . Marginal probit regressions with robust standard errors clustered at the
country level. Coecient is statistically dierent from 0 at the *** 1%, ** 5% and * 10% level.
Source :General Social Survey 1978-2004.
38
TABLE III - CORRELATION BETWEEN INHERITED TRUST OF US-IMMINGRANTS AND TRUST
IN THEIR SOURCE COUNTRY
Dependent variables
Inherited trust
in 2000
Inherited trust
in 1935
Inherited trust
in 2000
4th generation
(1) (2) (3)
Trust in home country
WVS 2000
.486***
(.160)
.451
(.297)
.489**
(.233)
Age .005***
(.000)
.003***
(.000)
-.003
(.003)
Men .032***
(.011)
.021*
(.011)
.023
(.017)
Education .040***
(.004)
.036***
(.003)
.044
(.007)
Income category .011***
(.002)
.017***
(.003)
.013***
(.003)
Employed -.003
(.024)
.019
(.025)
-.032
(.034)
Unemployed -.072***
(.038)
-.015
(.043)
-.059
(.046)
Protestant -.018
(.017)
.009
(.027)
-.015
(.029)
Catholic -.010
(.028)
.075**
(.033)
-.028
(.032)
Observations 4600 6713 2065
R2.063 .059 .054
Notes: The dependent variables are (1) The level of trust inherited by US-immigrants in the period 2000,
(2) The level of trust inherited by US-immigrants in the period 1935, (3) The level of trust inherited by fourth-
generation US-immigrants in the period 2000. The main explanatory variable is the average level of trust in
the source country of the US-immigrants in the period 2000. .Additional controls: age, age (square), gender,
education, income, employment status and religion. Marginal probit regressions with robust standard errors
clustered at the country level.
Coecient is statistically dierent from 0 at the *** 1%, ** 5% and * 10% level.
Source :General Social Survey 1977-2004; World Values Survey wave 2000.
39
TABLE IV - CORRELATION BETWEEN INHERITED TRUST OF US-IMMIGRANTS AND TRUST
IN A RANDOM SOURCE COUNTRY - COUNTERFACTUAL TEST
Dependent variables
Inherited trust
in 2000
Inherited trust
in 1935
(1) (2)
Trust in a random
source country
-.009
(.093)
.133
(.166)
Observations 4600 6713
R2.059 .054
Notes: The dependent variables are (1) The level of trust inherited by US-immigrants in the period 2000,
(2) The level of trust inherited by US-immigrants in the period 1935. The main explanatory variable is the
average trust in a country dierent from the source country of the US-immigrants. The country associated
to the US-immigrants is drawn randomly from a uniform distribution. Additional controls: age, age (square),
gender, education, income, employment status and religion. Marginal probit regressions with robust standard
errors clustered at the country level.
Coecient is statistically dierent from 0 at the *** 1%, ** 5% and * 10% level.
Source :General Social Survey 1977-2004; World Values Survey wave 2000.
40
TABLE V - INHERITED TRUST AND INCOME PER CAPITA IN 1935 AND 2000: CROSS—COUNTRY
REGRESSION
Dependent variable:
Income per capita in 1935 and 2000
(1) (2) (3) (4)
Inherited trust
in 1935 and 2000
39902.53***
(6255.70)
18874.3***
(5284.77)
22418.63***
( 6292.90)
25067.99***
( 7503.9)
Initial income per capita
1870 and 1930
3.58***
(.50)
3.74***
( .52)
3.50***
( .53)
Political institutions in
1930 and 2000
-110.68
( 74.90)
-85.84
( 75.13)
Outliers Africa, India
excluded
Adj-R2.45 .73 .69 .63
Observations 48 48 46 44
Notes: OLS regressions. The dependent variable is the GDP per capita in the source countries in 1935
and 2000, relative to Sweden. Data come from Maddison. Inherited trust of US-immigrants from the source
countries for the periods 1935 and 2000 is estimated relative to the trust inherited by US-immigrants with
Swedish ancestors for those periods. The coecients of inherited trust come from the regressions on the GSS.
Political institutions are measured by the index Polity2 from the Polity IV database. A higher level indicates
more democratic institutions. Institutions in the source countries are measured relative to Sweden. Coecient
is statistically dierent from 0 at the *** 1%, ** 5% and * 10% level.
41
TABLE VI - INHERITED TRUST AND INCOME PER CAPITA IN 1935 AND 2000: WITHIN ESTI-
MATES
Dependent variable: Income per capita in 1935 and 2000
(1) (2) (3) (4) (5)
Inherited trust
in 1935 and 2000
40862.45***
(9067.2)
20571.62***
(8242.58)
34900.08***
( 11802.24)
27964.54***
( 8954.26)
29716.38***
( 8628.82)
Initial income per
capita in
1870 and 1930
2.88***
(.73)
3.63***
(1.18)
3.16***
(1.09)
2.87**
( .91)
Political institutions
in 1930 and 2000
-257.69**
(102.72)
-146.18**
(90.49)
Outliers Africa
excluded
Country xed
eects Yes*** Yes *** Ye s *** Ye s *** Yes***
Adj-R2.73 .70 .64 .67 .72
Observations 48 48 46 46 46
Notes: OLS regressions. The dependent variable is the GDP per capita in the source countries in 1935 and
2000, relative to Sweden. GDP per capita is averaged over 10 years in Column (5). Data come from Maddison.
Inherited trust of US-immigrants from the source countries for the periods 1935 and 2000 is estimated relative
to the trust inherited by US-immigrants with Swedish ancestors for those periods. The coecients of inherited
trust come from the regressions on the GSS. Political institutions are measured by the index Polity2 from the
Polity IV database. A higher level indicates more democratic institutions. Institutions in the source countries
are measured relative to Sweden. Coecient is statistically dierent from 0 at the *** 1%, ** 5% and * 10%
level.
42
TABLE VII - INHERITED TRUST AND INCOME PER CAPITA: LAG OF AT LEAST 50 YEARS
BETWEEN INHERITED TRUST AND INCOME PER CAPITA
Dependent variable:
Income per capita in 1935 and 2000
(1) (2) (3)
Inherited trust
in 1935 and 2000
Minimum 50 years lag
29807.14***
(7961.38)
36231.24***
(9604.92)
25024.26***
( 7374.04)
Initial income per capita
1870 and 1930
4.01***
(.90)
Political institutions in
1930 and 2000
-161.70
(109.01)
Country dummies No Yes*** Yes***
Adj-R2.31 .34 .70
Observations 32 32 32
Notes: OLS regressions. The dependent variable is the GDP per capita in the source countries in 1935
and 2000, relative to Sweden. Data come from Maddison. We measure the trust that the ancestors of the US-
immigrants have transmitted to their descendants at least 50 years before the period 1935 and 2000. Inherited
trust of US-immigrants from the source countries for the periods 1935 and 2000 is estimated relative to the
trust inherited by US-immigrants with Swedish ancestors for those periods. The coecients of inherited trust
come from the regressions on the GSS. Political institutions are measured by the index Polity2 from the Polity
IV database. A higher level indicates more democratic institutions. Institutions in the source countries are
measured relative to Sweden. Coecient is statistically dierent from 0 at the *** 1%, ** 5% and * 10% level.
43
TABLE VIII - INHERITED TRUST IN 1910 AND 2000
Dependent variables
Inherited trust
in 1910
Inherited trust
in 2000
(1) (2)
CoeStd Error CoeStd Error
Country of origin Swedish ancestors - 1910 : Reference
Sweden .031*** (.006)
Africa -.138*** (.007) -.175*** (.038)
Canada .133*** (.006) .127*** (.028)
Czech Republic .115*** (.006) .049** (.022)
Denmark .113*** (.003) .179*** (.028)
France .088*** (.004) -.001 (.035)
Germany .054*** (.002) .047 (.032)
Ireland .094*** (.003) .057 (.033)
Italy -.042*** (.003) -.000 (.022)
Netherlands .073*** (.005) .075** (.030)
Norway .191*** (.001) .208*** (.028)
Poland .067*** (.008) .057** (.024)
Spain -.002 (.005) .143*** (.032)
Switzerland .232*** (.003) .204*** (.033)
United Kingdom .093*** (.001) .057 (.032)
Pseudo-R2.092
Observations 7351
GeneralSocialSurvey. Marginaleects with robust standard
error. ***:1%, **: 5%, *: 10%
Notes: The dependent variable is the level of trust inherited by US-immigrants for the periods 1910 and 2000.
Additional controls: age, age (square), gender, education, income, employment status and religion. Marginal
probit regressions with robust standard errors clustered at the country level.
Coecient is statistically dierent from 0 at the *** 1%, ** 5% and * 10% level.
Source :General Social Survey 1977-2004.
44
TABLE IX - INHERITED TRUST AND INCOME PER CAPITA IN 1910 AND 2000: CROSS-COUNTRY
REGRESSION
Dependent variable:
Income per capita in 1910 and 2000
(1) (2) (3)
Inherited trust in
1910 and 2000
39591.35***
(9005.7)
23988.16**
(8750.35)
23510.25**
( 9357.68)
Initial income per capita in
1870 and 1930
2.66***
(.78)
1.62**
(.77)
Political institutions in
1910 and 2000
10914.09*
(5515.04)
Country xed eect No No No
Adj-R2.48 .64 .60
Observations 30 30 30
Notes: OLS regressions. The dependent variable is the GDP per capita in the source countries in 1910
and 2000, relative to Sweden. Data come from Maddison. Inherited trust of US-immigrants from the source
countries for the periods 1910 and 2000 is estimated relative to the trust inherited by US-immigrants with
Swedish ancestors for those periods. The coecients of inherited trust come from the regressions on the GSS.
Political institutions are measured by the index Polity2 from the Polity IV database. A higher level indicates
more democratic institutions. Institutions in the source countries are measured relative to Sweden. Coecient
is statistically dierent from 0 at the *** 1%, ** 5% and * 10% level.
TABLE X - INHERITED TRUST AND INCOME PER CAPITA IN 1910 AND 2000: WITHIN ESTI-
MATES
Dependent variable:
Income per capita in 1910 and 2000
(1) (2) (3)
Inherited trust in
1910 and 2000
36988.20***
(9818.15)
25663.24***
(8580.27)
14819.34**
(5891.909)
Initial income per capita
1870 and 1930
4.00***
(1.27)
4.30***
(1.23)
Political constraints
1910 and 2000
301.92
(224.92)
Country xed eect Yes*** Ye s *** Ye s***
Adj-R2.27 .54 .54
Observations 30 30 30
Notes: OLS regressions. The dependent variable is the GDP per capita in the source countries in 1910
and 2000, relative to Sweden. Data come from Maddison. Inherited trust of US-immigrants from the source
countries for the periods 1910 and 2000 is estimated relative to the trust inherited by US-immigrants with
Swedish ancestors for those periods. The coecients of inherited trust come from the regressions on the GSS.
Political institutions are measured by the index Polity2 from the Polity IV database. A higher level indicates
more democratic institutions. Institutions in the source countries are measured relative to Sweden. Coecient
is statistically dierent from 0 at the *** 1%, ** 5% and * 10% level.
TABLE XI - INHERITED TRUST AND INCOME PER CAPITA IN 1935 AND 2000: ADDITIONAL
CONTROLS (I)
45
Dependent variable: Income per capita in 1935 and 2000
(1) (2) (3) (4) (5)
Inherited trust in
1935 and 2000
26837.76***
(9455.76)
31995.81**
(9148.59)
31362.48**
( 11612.1)
32040.61***
( 9202.87)
33639.02*
( 17104.27)
Initial income
per capita
in 1870 and 1930
1.993**
(.77)
2.24**
(.95)
2.02**
(.813)
1.86*
(.95)
1.51
(1.06)
Political institutions
in 1930 and 2000
-220.73**
(100.73)
-229.87**
(108.81)
-219.49*
(114.97)
-198.19
(122.07)
-190.37
(133.34)
Inherited attitudes
towards work and
origins of success
14839.16
(10760.52)
17104.27
(11938.16)
Inherited condence
in business
-2980.48
(16118.46)
-7638.94
(17182.13)
Inherited attitudes
towards government
intervention
142.24
(122777.14)
-320.61
(2914.93)
Inherited attitudes
towards gender
division of work
3336.77
(10484.9)
6319.01
(10939.65)
Country xed eects Yes*** Ye s *** Ye s *** Ye s*** Yes***
Adj-R2.70 .68 .67 .68 .66
Observations 46 46 46 46 46
Notes: OLS regressions. The dependent variable is the GDP per capita in the source countries in 1935 and
2000, relative to Sweden. Data come from Maddison. Inherited trust and attitudes of US-immigrants from
the source countries for the periods 1935 and 2000 is estimated relative to the trust and attitudes inherited by
US-immigrants with Swedish ancestors for those periods. The coecients come from the regressions on the GSS.
Political institutions are measured by the index Polity2 from the Polity IV database. A higher level indicates
more democratic institutions. Institutions in the source countries are measured relative to Sweden. Coecient
is statistically dierent from 0 at the *** 1%, ** 5% and * 10% level.
46
TABLE XII - INHERITED TRUST AND INCOME PER CAPITA IN 1935 AND 2000: ADDITIONAL
CONTROLS (II)
Dependent variables: Income per capita in 1935 and 2000
(1) (2) (3) (4)
Inherited trust in
1935 and 2000
23520.25**
(9357.68)
31995.81***
(9148.59)
32265.39**
( 8765.55)
31215.1***
( 7674.84)
Initial income
per capita
in 1870 and 1930
1.62**
(.77)
2.24**
(.95)
1.43
(.88)
1.61**
(.73)
Political institutions
in 1930 and 2000
-383.44**
(128.64)
-229.87*
(109.80)
-109.17
(126.93)
-68.27
(128.69)
Preschool enrollment
in 1870 and 1930
10914.09**
(5515.04)
8261.16*
(4520.91)
Non-religious persons
in 1900 and 2000
-3145.13
(7098.95)
-29102.94***
(9268.96)
Religious
fractionalization
in 1900 and 2000
-6190.92
(4358.18)
-22405.04***
(5763.20)
Country xed eects Yes*** Ye s *** Ye s *** Ye s ***
Adj-R2.70 .68 .70 .83
Observations 46 46 46 46
Notes: OLS regressions. The dependent variable is the GDP per capita in the source countries in 1935 and
2000, relative to Sweden. Data come from Maddison. Inherited trust and attitudes of US-immigrants from
the source countries for the periods 1935 and 2000 is estimated relative to the trust and attitudes inherited
by US-immigrants with Swedish ancestors for those periods. The coecients of inherited trust come from the
regressions on the GSS. Political institutions are measured by the index Polity2 from the Polity IV database.
A higher level indicates more democratic institutions. Institutions in the source countries are measured relative
to Sweden. Coecient is statistically dierent from 0 at the *** 1%, ** 5% and * 10% level..
47
TABLE XIII - CORRELATION BETWEEN INHERITED TRUST AND TRUST IN THE SOURCE
COUNTRY: SUB-GROUPS BY WAVES OF IMMIGRATION
Dependent variables
(1)(2)(3)(4)
Inherited trust
2nd-3d generation
Period 1935
Inherited trust
4th generation
Period 1935
Inherited trust
2nd-3d generation
Period 2000
Inherited trust
4th generation
Period 2000
(1)(2)(3)(4)
Trust i n
source ountry
.223
(.136)
.437
(.345)
.426***
(.085)
.489**
(.233)
Observations 931 5782 2535 2065
R2.040 .063 .056 .054
Notes: The dependent variables are (1) The level of trust inherited by second-generation and third generation
US-immigrants in the period 1935, (2) The level of trust inherited by fourth generation US-immigrants in the
period 1935, (3) The level of trust inherited by second-generation and third generation US-immigrants in the
period 2000, (4) The level of trust inherited by fourth generation US-immigrants in the period 2000. The main
explanatory variable is the average level of trust in the source country of the US-immigrants in the period 2000.
.Additional controls: age, age (square), gender, education, income, employment status and religion. Marginal
probit regressions with robust standard errors clustered at the country level.
Coecient is statistically dierent from 0 at the *** 1%, ** 5% and * 10% level.
Source :General Social Survey 1977-2004; World Values Survey wave 2000.
TABLE XIV - INHERITED TRUST AND INCOME PER CAPITA IN 1935 AND 2000: ROBUSTNESS
CHECKS FOR THE TRUST INDICATOR
Dependent variable: Income per capita in 1935 and 2000
Trust 1 Tr u s t 2 Trust 3
Inherited trust
in 1935 and 2000
9234.90***
(2449.64)
24411.75***
(6688.01)
25101.59**
( 3.25)
Initial income per capita
in 1870 and 1930
3.01***
(1.00)
3.28***
(.98)
2.24***
(.96)
Political institutions
in 1930 and 2000
-197. 63**
(91.08)
-189. 58*
(91.99)
-183. 19*
(90.15)
Country xed eects Yes*** Ye s *** Yes***
Adj-R2.71 .70 .71
Observations 46 46 46
Trust1 = 3 for trust, 2 for depends, 1 for no trust
Trust2 = 1 for trust, 0 for no trust. Answers “Depends” deleted
Trust3 = 1 for trust and depends, 0 for no trust
Notes: OLS regressions. Coecient is statistically dierent from 0 at the *** 1%, ** 5% and * 10% level.
48
TABLE XV - INHERITED TRUST AND INCOME PER CAPITA IN 1950 AND 2000 - LAG OF 75
YEARS IN INHERITED TRUST
Dependent variable: Income per capita in 1950 and 2000
(1) (2) (3)
Inherited trust in 1950 and 2000
Minimum lag of 75 years
31319.76***
(8243.81)
34200.61***
(9001.73)
251995.65***
( 6824.92)
Initial income per capita
1870 and 1930
3.64***
(.78)
Political constraints
1950 and 2000
-25.74
(91.14)
Country dummies No Yes*** Ye s ***
Adj-R2.28 .46 .75
Observations 34 34 34
Notes: OLS regressions. The dependent variable is the GDP per capita in the source countries in 1950
and 2000, relative to Sweden. Data come from Maddison. We measure the trust that the ancestors of the US-
immigrants have transmitted to their descendants at least 75 years before the period 1950 and 2000. Inherited
trust of US-immigrants from the source countries for the periods 1950 and 2000 is estimated relative to the
trust inherited by US-immigrants with Swedish ancestors for those periods. The coecients of inherited trust
come from the regressions on the GSS. Political institutions are measured by the index Polity2 from the Polity
IV database. A higher level indicates more democratic institutions. Institutions in the source countries are
measured relative to Sweden. Coecient is statistically dierent from 0 at the *** 1%, ** 5% and * 10% level.
49
TABLE XVI - SAMPLES OF THE GSS AND WVS
General Social Survey World Values Survey
N“Trust most
other people”
“Can’t be
too careful”
“Depends” N
“Trust most other
people / Can’t be
too careful ” 1-0
Africa 3,705 .17 .79 .04 4,109 .14
Austria 245 .44 .50 .06 1,520 .33
Belgium 71 .51 .49 .0 1,823 .29
Canada 787 .41 .55 .04 1,811 .37
Czech Rep. 535 .44 .49 .07 1,840 .25
Denmark 314 .53 .43 .04 1,013 .66
Finland 202 .52 .41 .07 988 .58
France 859 .44 .50 .06 1,587 .21
Germany 7,099 .44 .52 .04 2,019 .37
Hungary 252 .43 .52 .02 985 .24
India 166 .29 .60 .11 1,337 .38
Ireland 4,859 .45 .50 .05 965 .36
Italy 2,264 .38 .57 .05 1,950 .32
Mexico 1,453 .25 .70 .05 1,124 .20
Netherlands 670 .42 .54 .06 984 .60
Norway 768 .57 .40 .03 1,101 .66
Poland 1,228 .43 .52 .05 1,090 .18
Portugal 117 .35 .59 .06 901 .12
Russia 629 .47 .47 .06 2,480 .23
Spain 395 .33 .63 .04 2,232 .36
Sweden 679 .51 .44 .05 913 .67
Switzerland 184 .54 .41 .05 1,103 .37
United Kd 6,806 .50 .45 .05 884 .27
Yugoslavia 162 .48 .47 .05 1,194 .16
50
TABLE XVII - OBSERVATIONS FOR INHERITED TRUST IN 1935 AND 2000: GSS 1977-2004
country of origin Inherited trust in 1935 Inherited trust in 2000
Africa 1,721 680
Austria 44 96
Belgium 12 26
Canada 239 184
Czech Republic 115 213
Denmark 110 77
Finland 43 72
France 334 195
Germany 2,938 1,634
Hungary 26 108
India 10 11
Ireland 2,061 1,046
Italy 271 1,101
Mexico 101 449
Netherlands 263 158
Norway 281 215
Poland 190 554
Portugal 13 42
Russia 69 267
Spain 82 87
Sweden 229 217
Switzerland 69 40
United Kingdom 3,355 1,071
Yugoslavia 18 87
51
TABLE XVIII - OBSERVATIONS FOR INHERITED TRUST IN 1910, 1935 AND 2000: GSS 1977-2004.
Country of origin Inherited trust in 1910 Inherited trust in 1935
Minimum Lag 50 years
Inherited trust in 2000
Minimum Lag 50 years
NNN
Africa 565 564 1,830
Canada 66 64 117
Czech Republic 20 17 263
Denmark 26 22 131
France 107 101 401
Germany 911 852 3,301
Ireland 723 699 2,189
Italy 22 15 1,247
Mexico - 26 523
Netherlands 101 98 278
Norway 56 50 360
Poland 21 11 643
Spain 21 20 145
Sweden 41 36 331
Switzerland 27 25 73
United Kingdom 1,481 1,439 2,783
TABLE XIX - DESCRIPTIVE STATISTICS: GSS 1977-2004
Variable Cohort 1910 Cohort 1935 Cohort 2000
MeanStdMeanStdMeanStd
Age 66.71 10.98 54.44 16.76 36.15 .14
Men .40 .49 .43 .49 .458 .49
Education 11.95 3.28 12.81 3.03 13.48 2.59
Income 9.43 2.89 10.07 2.65 10.44 2.53
Inactive .66 .47 .40 .49 .24 .42
Unemployed 0 0 .02 .14 .03 .18
Employed .34 .47 .58 .49 .72 .44
Catholic .15 .36 .20 .39 .39 .48
Protestant .80 .39 .72 .44 .44 .49
No religion .03 .18 .06 .24 .12 .32
52
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