Transaction costs are a major reason why international trade flows are much smaller than traditional trade theory would suggest. Trust between trading partners lowers transaction costs and may therefore enhance trade. The empirical analysis of this paper shows that more trust leads to more trade...

Co-ethnic employment refers to the stylised fact of many labour markets that there is an over-representation of workers of the same ethnic group within firms. This paper presents empirical proof of the phenomenon and analyses the incentives for employees to work in co-ethnic firms. It argues...