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Inequality and Trust: Some Inequalities are More Harmful than Others

Author

Listed:
  • Gustavsson, Magnus

    (Department of Economics)

  • Jordahl, Henrik

    (Department of Economics)

Abstract

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.

Suggested Citation

  • Gustavsson, Magnus & Jordahl, Henrik, 2006. "Inequality and Trust: Some Inequalities are More Harmful than Others," Working Paper Series 2006:3, Uppsala University, Department of Economics.
    • Handle: RePEc:hhs:uunewp:2006_003
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    References listed on IDEAS

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    Cited by:

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    3. Per Engstrom & Bertil Holmlund, 2009. "Tax evasion and self-employment in a high-tax country: evidence from Sweden," Applied Economics, Taylor & Francis Journals, vol. 41(19), pages 2419-2430.
    4. Florence Neymotin, 2014. "Immigrant influx and social cohesion erosion," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-29, December.
    5. Ågren, Martin, 2006. "Prospect Theory and Higher Moments," Working Paper Series 2006:24, Uppsala University, Department of Economics.
    6. Domenico Moramarco & Flaviana Palmisano, 2023. "Trust in institutions and the profile of inequality: A worldwide perspective," WIDER Working Paper Series wp-2023-12, World Institute for Development Economic Research (UNU-WIDER).
    7. Katarzyna Samson, 2018. "Trust as a mechanism of system justification," PLOS ONE, Public Library of Science, vol. 13(10), pages 1-22, October.
    8. Sander Steijn & Bram Lancee, 2011. "GINI DP 20: Does Income Inequality Negatively Affect General Trust? Examining three potential problems with the inequality-trust hypothesis," GINI Discussion Papers 20, AIAS, Amsterdam Institute for Advanced Labour Studies.
    9. Youngmin Oh & In Won Lee & Carrie Blanchard Bush, 2014. "The Role of Dynamic Social Capital on Economic Development Partnerships Within and Across Communities," Economic Development Quarterly, , vol. 28(3), pages 230-243, August.

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    Keywords

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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