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Respect, Responsibility, and Development

We develop a theory that explains how two core values – Respect for others and Responsibility – affect productivity, the accumulation of capital, and output per worker. Using data from the World Values Survey, we empirically test the model using a panel dataset that includes 82 countries over six distinct years. We find that these two core values are important to production and that their impact is substantial. We also show that Respect and Responsibility reduce the influence of trust and mitigate the negative macroeconomic effects associated with fractionalized societies. Our results are robust to various treatments for endogeneity and under alternative samples.