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Does Trust Influence Social Expenditures? Evidence from Local Governments
Author(s) -
Camussi Silvia,
Mancini Anna Laura,
Tommasino Pietro
Publication year - 2018
Publication title -
kyklos
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.766
H-Index - 58
eISSN - 1467-6435
pISSN - 0023-5962
DOI - 10.1111/kykl.12162
Subject(s) - endogeneity , generosity , instrumental variable , economics , welfare , social trust , public economics , politics , variable (mathematics) , econometrics , social capital , political science , market economy , mathematical analysis , mathematics , law
Summary We document that trust has a positive impact on the generosity of welfare spending. Our analysis relies on a unique dataset including detailed budgetary data of more than 2,000 Italian municipalities. Compared with previous contributions based on cross‐country data, our approach reduces the risk of omitted variable bias and measurement errors. Furthermore, drawing on Italy's rich political history, we are able to use an instrumental variables strategy that addresses the possible endogeneity of trust.