I'll Be There for You: Disaster Relief and Trust in Supranational Institutions

Declining trust in supranational institutions may undermine the effective management of global challenges requiring cross-border coordination. We estimate the causal effect of supranational financial assistance following major adverse shocks on citizens' trust in supranational institutions. Our empirical setting is the European Union (EU), where the European Union Solidarity Fund (EUSF) - the EU's main instrument for post-disaster support - provides a uniquely suitable empirical setting for identifying the political effects of supranational assistance following major natural disasters. Identification relies on plausibly exogenous variation in exposure to EUSF assistance together with the "impressionable years" hypothesis. Combining individual-level survey data with geocoded information on natural disasters and EUSF interventions over the 2002-2018 period, we find that exposure to EUSF assistance generates a sizable increase in confidence in the EU that remains detectable several years after the intervention. The effect is economically meaningful and substantially stronger in regions characterized by lower-quality local governance and among more risk-averse individuals, consistent with institutional substitution and insurance mechanisms. Finally, using regional macroeconomic data, we provide supporting evidence that EUSF interventions mitigate the economic downturns associated with natural disasters, suggesting that supranational assistance in moments of distress can generate both economic and political returns.