Trust and schooling in the United States

I investigate the effects of trust on human capital measured as average years of schooling in U.S. states using data from the 1980s and the 1990s. I find robust evidence that an increase in trust increases schooling across U.S. states. According the results of the seemingly unrelated regression estimation, a 25 percentage point increase in Trust increases the average years of schooling by approximately 1.5 months. This is not insignificant since more than $5000 increase in per capita income (in 2000 prices) is needed to have the same effect on schooling.

► I investigate the effects of trust on human capital in U.S. states. ► I find robust evidence that an increase in trust increases schooling across U.S. states. ► A 25 percentage point increase in the share of trusting people increases the average years of schooling by 1.5 months.