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Inequality and Trust

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Author Info
Jordahl, Henrik () (Research Institute of Industrial Economics (IFN))

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Abstract

This paper reviews the literature on economic inequality and trust. Cross-country studies, within-country studies, and experiments all suggest that economic inequality exerts a negative influence on trust. Four mechanisms are proposed to explain the negative relationship: social ties (or networks), inference on social relationships (to see inequality as a signal of untrustworthy behavior), conflicts over resources, and opportunity cost of time. Social ties receive the strongest empirical support, but there is also some evidence in favor of inference on social relationships. Conflicts over resources and opportunity cost of time are contradicted by important pieces of evidence.

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Publisher Info
Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 715.

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Length: 21 pages
Date of creation: 21 Aug 2007
Date of revision:
Publication status: Published in Handbook of Social Capital, Svendsen, Gert, Svendsen, Gunnar (eds.), 2009, chapter 19, Edward Elgar.
Handle: RePEc:hhs:iuiwop:0715

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Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
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Web page: http://www.ifn.se/
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Related research
Keywords: Trust; Inequality; Social Capital; Social Ties; Networks;

Other versions of this item:

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

This paper has been announced in the following NEP Reports:

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.:
  1. Anthony B. Atkinson & Andrea Brandolini, 2000. "Promise and Pitfalls in the Use of 'Secondary' Data-Sets: Income Inequality in OECD Countries," Temi di discussione (Economic working papers) 379, Bank of Italy, Economic Research Department. [Downloadable!]
    Other versions:
  2. Gustavsson, Magnus & Jordahl, Henrik, 2006. "Inequality and Trust in Sweden: Some Inequalities are More Harmful than Others," Ratio Working Papers 106, The Ratio Institute. [Downloadable!]
    Other versions:
  3. Johansson-Stenman, Olof, 2006. "Who Are the Trustworthy, We Think?," Working Papers in Economics 222, Göteborg University, Department of Economics. [Downloadable!]
    Other versions:
  4. Zak, Paul J & Knack, Stephen, 2001. "Trust and Growth," Economic Journal, Royal Economic Society, vol. 111(470), pages 295-321, April. [Downloadable!] (restricted)
  5. Alberto Alesina & Eliana La Ferrara, 2000. "Participation In Heterogeneous Communities," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 847-904, August. [Downloadable!] (restricted)
    Other versions:
  6. Andrew Leigh, 2006. "Trust, Inequality and Ethnic Heterogeneity," The Economic Record, The Economic Society of Australia, vol. 82(258), pages 268-280, 09. [Downloadable!] (restricted)
    Other versions:
  7. Stephen Leider & Markus M. Möbius & Tanya Rosenblat & Quoc-Anh Do, 2007. "Directed Altruism and Enforced Reciprocity in Social Networks: How Much is A Friend Worth?," NBER Working Papers 13135, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Justina A.V. Fischer & Benno Torgler, 2006. "The Effect of Relative Income Position on Social Capital," Economics Bulletin, Economics Bulletin, vol. 26(4), pages 1-20. [Downloadable!]
  9. Berggren, Niclas & Elinder, Mikael & Jordahl, Henrik, 2007. "Trust and Growth: A Shaky Relationship," Working Paper Series 705, Research Institute of Industrial Economics. [Downloadable!]
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  10. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
  11. Alesina, Alberto & La Ferrara, Eliana, 2002. "Who trusts others?," Journal of Public Economics, Elsevier, vol. 85(2), pages 207-234, August. [Downloadable!] (restricted)
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  12. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June. [Downloadable!] (restricted)
    Other versions:
  13. Andrew Leigh, 2006. "Does Equality Lead to Fraternity?," CEPR Discussion Papers 513, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
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  14. Hilde Coffé & Benny Geys, 2006. "Community Heterogeneity: A Burden for the Creation of Social Capital?," Social Science Quarterly, The Southwestern Social Science Association, vol. 87(5), pages 1053-1072. [Downloadable!] (restricted)
    Other versions:
  15. Lisa Anderson & Jennifer Mellor & Jeffrey Milyo, 2006. "Induced heterogeneity in trust experiments," Experimental Economics, Springer, vol. 9(3), pages 223-235, September. [Downloadable!] (restricted)
  16. Markus Mobius & Adam Szeidl, 2007. "Trust and Social Collateral," NBER Working Papers 13126, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  17. Christian Bjørnskov, 2007. "Determinants of generalized trust: A cross-country comparison," Public Choice, Springer, vol. 130(1), pages 1-21, January. [Downloadable!] (restricted)
  18. Morgan Kelly, 2000. "Inequality And Crime," The Review of Economics and Statistics, MIT Press, vol. 82(4), pages 530-539, November. [Downloadable!] (restricted)
  19. 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. [Downloadable!] (restricted)
  20. Niclas Berggren & Henrik Jordahl, 2006. "Free to Trust: Economic Freedom and Social Capital," Kyklos, Blackwell Publishing, vol. 59(2), pages 141-169, 05. [Downloadable!] (restricted)
    Other versions:
  21. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," World Bank Economic Review, Oxford University Press, vol. 10(3), pages 565-91, September.
Full references

Cited by:
(explanations, 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.)

  1. Fischer, Justina AV, 2009. "The Welfare Effects of Social Mobility: An Analysis for OECD countries," MPRA Paper 17070, University Library of Munich, Germany. [Downloadable!]
  2. Fischer, Justina AV, 2008. "The Welfare Effects of Social Mobility," MPRA Paper 16339, University Library of Munich, Germany, revised Jun 2009. [Downloadable!]
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