Trust, Inequality, and Ethnic Heterogeneity

Abstract

Using a large social survey, combined with precise data on neighborhood characteristics, I explore the factors that affect trust at a local level (localized trust) and at a national level (generalized trust) within Australia. Trust is positively associated with the respondent's education, and negatively associated with the amount of time spent commuting. At a neighborhood level, trust is higher in more affluent areas, and lower in more ethnically heterogeneous communities. Ethnic heterogeneity reduces localized trust for both natives and immigrants, and reduces generalized trust only for immigrants. Language differences have the strongest adverse impact on trust, suggesting that communication may be a key mediating factor. By contrast with the United States, there is no apparent relationship between trust and inequality across neighborhoods in Australia.

Keywords: Income distribution, immigration, language, fractionalization, social capital

JEL Classification: D31, D71, J15, Z13