TRUST, INEQUALITY AND THE SIZE OF THE CO‐OPERATIVE SECTOR: CROSS‐COUNTRY EVIDENCE

ABSTRACT: We provide the first empirical evidence on the determinants of differences in the size of the cooperative sector around the world. Our key data have been recently released by the ICA and are integrated with other standard sources, such as data from the World Values surveys. In our empirical work we concentrate on the links between inequality and trust and cooperative incidence and undertake selectivity correction estimates as well as a series of robustness checks. Consistent with theory we find strong support for the proposition that trust plays a causal role in accounting for differences in co‐operative incidence. Also consistent with theory, we find support (albeit much weaker) for the role of inequality. Further support for our findings flows from our estimates for conventional, listed firms, where we do not find that trust and inequality play similar roles in accounting for the variation in the incidence of large listed firms across countries.