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How Inequality Affects Trust in Institutions: Evidence from Indonesia

Author

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  • Asep Suryahadi
  • Ridho Al Izzati
  • Daniel Suryadarma
  • Teguh Dartanto

Abstract

Trust is an important ingredient to improve economic performance and people's welfare by alleviating market failures caused by imperfect information, costly enforcement, or coordination failures. Using the World Values Survey 2018, we estimate the impact of village and district levels inequality on trust in institutions in Indonesia. We find that higher village level inequality has a negative effect only on trust in strangers, while higher district level inequality reduces trust in television, the press, the central government, the courts, and the police. The implication points to the importance of keeping inequality at the aggregate level in check to maintain people's trust in social, political and state institutions.

Suggested Citation

  • Asep Suryahadi & Ridho Al Izzati & Daniel Suryadarma & Teguh Dartanto, 2023. "How Inequality Affects Trust in Institutions: Evidence from Indonesia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 18(1), pages 73-91, January.
    • Handle: RePEc:bla:asiapr:v:18:y:2023:i:1:p:73-91
    DOI: 10.1111/aepr.12401
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    References listed on IDEAS

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    5. Takayuki Higashikata, 2023. "Comment on “How Inequality Affects Trust in Institutions: Evidence from Indonesia”," Asian Economic Policy Review, Japan Center for Economic Research, vol. 18(1), pages 95-96, January.

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