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Does Democracy Foster Trust?

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Author Info

  • Rainer, Helmut

    ()
    (Ifo Institute for Economic Research)

  • Siedler, Thomas

    ()
    (University of Hamburg)

Abstract

The level of trust inherent in a society is important for a wide range of microeconomic and macroeconomic outcomes. This paper investigates how individuals’ attitudes toward social and institutional trust are shaped by the political regime in which they live. The German reunification is a unique natural experiment that allows us to conduct such a study. Using data from the German General Social Survey (ALLBUS) and from the German Socio-Economic Panel Study (SOEP), we obtain two sets of results. On one side, we find that, shortly after reunification, East Germans displayed a significantly less trusting attitude than West Germans. This suggests a negative effect of communism in East Germany versus democracy in West Germany on social and institutional trust. However, the experience of democracy by East Germans since reunification did not serve to increase levels of social trust significantly. In fact, we cannot reject the hypothesis that East Germans, after more than a decade of democracy, have the same levels of social distrust as shortly after the collapse of communism. In trying to understand the underlying causes, we show that the persistence of social distrust in the East can be explained by negative economic outcomes that many East Germans experienced in the post-reunification period. Our main conclusion is that democracy can foster trust in post-communist societies only when citizens’ economic outcomes are right.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2154.

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Length: 31 pages
Date of creation: Jun 2006
Date of revision:
Publication status: published in: Journal of Comparative Economics, 2009, 37 (2), 251-269
Handle: RePEc:iza:izadps:dp2154

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Keywords: social trust; political regimes; institutional trust;

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References

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  10. Fehr, Ernst & Fischbacher, Urs & von Rosenbladt, Bernhard & Schupp, Jürgen & Wagner, Gert G., 2003. "A nation-wide laboratory: Examining trust and trustworthiness by integrating behavioral experiments into representative surveys," Discussion Papers 2003/1, Technische Universität Berlin, School of Economics and Management.
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