We characterize an equilibrium development process driven by the interaction of the distribution of wealth with credit constraints and the distribution of entrepreneurial skills. When efficient entrepreneurs are relatively abundant, a "traditional" development process emerges in which the...

Many argue that elements of a society's norms, culture or social capital are central to understanding its development. However, these notions have been difficult to capture in economic models. Here, we argue that trustworthiness is the economically relevant component of a society's culture and,...