Inequality and Trust: Some Inequalities are More Harmful than Others
Uppsala University Economics Working Paper No. 2006:3
33 Pages Posted: 2 Oct 2006 Last revised: 2 Feb 2017
Date Written: January 17, 2006
We present new evidence on the influence of income inequality on generalized trust. Using individual panel data from Swedish counties together with an instrumental variable strategy we find that differences in disposable income, and especially differences among people in the bottom half of the income distribution, are associated with lower trust. The relationship between income inequality and trust is particularly strong for people with a strong aversion against income differentials. We also find that the proportion of people born in a foreign country is negatively associated with trust.
Keywords: trust, social capital, inequality
JEL Classification: C23, D31, Z13
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