Does Corruption Erode Trust in Government? Evidence from a Recent Surge of Local Scandals in Spain

Abstract

We examine whether a corruption scandal in which the incumbent is implicated undermines trust in local government. We use a novel dataset containing information on local corruption scandals reported in Spain during the period 1999-2009, and data on the level of trust expressed in local politicians drawn from a new survey conducted in late 2009. We use matching methods to improve the identification of the effect of corruption scandals on trust, comparing municipalities affected by a scandal with those presenting similar traits but in which no scandal had been reported. We find that corruption scandals have a marked negative effect on trust in local politicians. This effect is even more marked in the case of individuals that have no ideological attachment to the party accused of corruption and/or who obtain their information from the media. Several falsification tests, based on a sample of corruption scandals reported after the survey had been conducted, confirm the causal interpretation of these results.

Keywords: corruption, trust

JEL Classification: P16, D72