Does social trust determine the size of the welfare state? Evidence using historical identification
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- Bjørnskov, C. & Svendsen, G.T. Public Choice (2013) 157: 269. doi:10.1007/s11127-012-9944-x
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Most modern welfare states offer an extensive array of services and benefits that are wholly or partly financed by tax revenue. One missing link in explaining the long-run sustainability of such comprehensive welfare states could be the already-existing stock of trust. Indeed, our cross-country results suggest that trust determines the size of welfare states as well as three features that are arguably necessary for their preservation: high levels of political confidence, strong legal institutions protecting private property rights, and low levels of bureaucratic corruption.