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Income inequality and trust in national governments in Central, Eastern and Southeastern Europe

Author

Listed:
  • Christian Alexander Belabed
  • Mariya Hake

    (Oesterreichische Nationalbank, Foreign Research Division)

Abstract

Using unique evidence from the OeNB Euro Survey, this paper sheds light on the correlation between the distribution of income and trust in national governments in ten Central, Eastern and Southeastern European (CESEE) countries between 2009 and 2015. By applying multilevel modeling to account for the hierarchical structure of the data, our main findings indicate that trust in national institutions increases with the individual’s position in the regional income distribution but it overall declines with the increase of regional and country income inequality. This result is valid across different measures of income inequality and despite the slight decrease of income inequality over the period. Our analysis shows that perceived high corruption and weak rule of law are key determinants of distrust in national governments, while the negative link between income inequality and trust in national governments is more pronounced in the non-EU countries in our sample.

Suggested Citation

  • Christian Alexander Belabed & Mariya Hake, 2018. "Income inequality and trust in national governments in Central, Eastern and Southeastern Europe," Working Papers 222, Oesterreichische Nationalbank (Austrian Central Bank).
  • Handle: RePEc:onb:oenbwp:222
    as

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    File URL: https://www.oenb.at/dam/jcr:7dc0585f-2bb4-4bf6-8980-c032b0ff4770/WP222.pdf
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    References listed on IDEAS

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    Cited by:

    1. Mariya Hake & Philipp Poyntner, 2019. "Household loans in CESEE from a new perspective: the role of income distribution," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q2/19, pages 75-93.
    2. Markéta Hnízdilová & Václav Adamec, 2020. "Per Capita Income Inequality in Czech Households Before, During and After the Economic and Financial Crisis," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 68(5), pages 885-899.
    3. Hake, Mariya & Poyntner, Philipp, 2020. "Keeping up with the Novaks? Income distribution as a determinant of household debt in CESEE," BOFIT Discussion Papers 3/2020, Bank of Finland, Institute for Economies in Transition.

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    More about this item

    Keywords

    Income inequality; Institutional trust; Multilevel models;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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