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Trust, welfare states and income equality: Sorting out the causality

Bergh, Andreas LU and Bjornskov, Christian (2014) In European Journal of Political Economy 35. p.183-199
Abstract
The cross-country correlation between social trust and income equality is well documented, but few studies examine the direction of causality. We show theoretically that by facilitating cooperation, trust may lead to more equal outcomes, while the feedback from inequality to trust is ambiguous. Using a structural equation model estimated on a large country sample, we find that trust has a positive effect on both market and net income equality. Larger welfare states lead to higher net equality but neither net income equality nor welfare state size seems to have a causal effect on trust. We conclude that while trust facilitates welfare state policies that may reduce net inequality, this decrease in inequality does not increase trust. (C)... (More)
The cross-country correlation between social trust and income equality is well documented, but few studies examine the direction of causality. We show theoretically that by facilitating cooperation, trust may lead to more equal outcomes, while the feedback from inequality to trust is ambiguous. Using a structural equation model estimated on a large country sample, we find that trust has a positive effect on both market and net income equality. Larger welfare states lead to higher net equality but neither net income equality nor welfare state size seems to have a causal effect on trust. We conclude that while trust facilitates welfare state policies that may reduce net inequality, this decrease in inequality does not increase trust. (C) 2014 Elsevier B.V. All rights reserved. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Social trust, Inequality, Welfare state
in
European Journal of Political Economy
volume
35
pages
183 - 199
publisher
Tranfer Verlag, Regensburg, FRG
external identifiers
  • wos:000341480800013
  • scopus:84903886042
ISSN
0176-2680
DOI
10.1016/j.ejpoleco.2014.06.002
language
English
LU publication?
yes
id
befbad48-666d-4e0d-a09d-72de2745addc (old id 4713939)
date added to LUP
2014-11-06 13:42:48
date last changed
2017-11-12 03:14:30
@article{befbad48-666d-4e0d-a09d-72de2745addc,
  abstract     = {The cross-country correlation between social trust and income equality is well documented, but few studies examine the direction of causality. We show theoretically that by facilitating cooperation, trust may lead to more equal outcomes, while the feedback from inequality to trust is ambiguous. Using a structural equation model estimated on a large country sample, we find that trust has a positive effect on both market and net income equality. Larger welfare states lead to higher net equality but neither net income equality nor welfare state size seems to have a causal effect on trust. We conclude that while trust facilitates welfare state policies that may reduce net inequality, this decrease in inequality does not increase trust. (C) 2014 Elsevier B.V. All rights reserved.},
  author       = {Bergh, Andreas and Bjornskov, Christian},
  issn         = {0176-2680},
  keyword      = {Social trust,Inequality,Welfare state},
  language     = {eng},
  pages        = {183--199},
  publisher    = {Tranfer Verlag, Regensburg, FRG},
  series       = {European Journal of Political Economy},
  title        = {Trust, welfare states and income equality: Sorting out the causality},
  url          = {http://dx.doi.org/10.1016/j.ejpoleco.2014.06.002},
  volume       = {35},
  year         = {2014},
}