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.
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Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number
673.
Length: 32 pages Date of creation: 14 Nov 2006 Date of revision: Publication status: Published in Journal of Public Economics, 2008, pages 348-365. Handle: RePEc:hhs:iuiwop:0673
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Find related papers by JEL classification: C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution Z13 - Other Special Topics - - Cultural Economics - - - Social Norms and Social Capital; Social Networks Economic Anthropology
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Alesina, Alberto & La Ferrara, Eliana, 2002.
"Who trusts others?,"
Journal of Public Economics,
Elsevier, vol. 85(2), pages 207-234, August.
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Other versions:
Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000.
"Measuring Trust,"
The Quarterly Journal of Economics,
MIT Press, vol. 115(3), pages 811-846, August.
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