Trust in Public Institutions Over the Business Cycle
University of Michigan
University of Michigan at Ann Arbor - Department of Economics; The Ford School of Public Policy, University of Michigan; The Brookings Institution; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Kiel Institute for the World Economy
IZA Discussion Paper No. 5570
We document that trust in public institutions ﾖ and particularly trust in banks, business and government ﾖ has declined over recent years. U.S. time series evidence suggests that this partly reflects the pro-cyclical nature of trust in institutions. Cross-country comparisons reveal a clear legacy of the Great Recession, and those countries whose unemployment grew the most suffered the biggest loss in confidence in institutions, particularly in trust in government and the financial sector. Finally, analysis of several repeated cross-sections of confidence within U.S. states yields similar qualitative patterns, but much smaller magnitudes in response to state-specific shocks.
Number of Pages in PDF File: 13
Keywords: trust, institutions, confidence, survey data, congress, banks, big business, media, courts
JEL Classification: D72, E32, E65, K0, O4, P52, Z13working papers series
Date posted: March 21, 2011
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