Trust and Specialization: Evidence from U.S. States

José De Sousa (), Amélie Guillin, Julie Lochard and Arthur Silve

Cahiers de recherche from Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques

Abstract: Is culture a determinant of a jurisdiction’s comparative advantage? U.S. states that display a high level of generalized trust specialize in more “complex” industries that use contracts more intensively in their input-output relationships. This pattern is not driven by differences in states’ other observable characteristics or by unobservable time-varying industry- or state-specific factors, and it does not reflect selection by export destination. Theoretical considerations suggest that trust may be endogenous to the location of complex industries. An instrumental variable strategy that leverages the contemporary trust impact of historical racial discrimination confirms that trust factors into the comparative advantage of U.S. states.

Keywords: : Trust; Complexity; Comparative Advantage; Specialization (search for similar items in EconPapers)
JEL-codes: F10 Z13 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-geo and nep-soc
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