The CEPR and Portal websites will be unavailable between 12:45GMT and 13:00GMT on Friday, 30th October 2020 due to maintenance.

DP10061 | Trust and the Welfare State: the Twin Peaks Curve

Publication Date

13/07/2014

JEL Code(s)

Keyword(s)

Programme Area(s)

Network(s)

Abstract

We show the existence of a twin peaks relation between trust and the size of the welfare state that stems from two opposing forces. Uncivic people support large welfare states because they expect to benefit from them without bearing their costs. But civic individuals support generous benefits and high taxes only when they are surrounded by trustworthy individuals. We provide empirical evidence for these behaviors and this twin peaks relation in the OECD countries.