Immigration and Generalised Trust : Evidence from the European Refugee Crisis in Germany

This paper investigates whether a native’s local exposure to immigration affects their generalised trust, in the context of Germany during the 2014-16 European Refugee Crisis. While the literature has extensively studied the impacts of immigration and the determinants of trust separately, scant empirical work has sought to causally link the two ; this is despite the existence of several plausible theoretical mechanisms. Exploiting the quasi-random allocation of refugees across Germany’s federal states, I employ two identification strategies : a Two-Way Fixed Effects model and a Difference-in-Differences model – the latter being my preferred approach, as it more effectively leverages the exogenous variation induced by the European Refugee Crisis. Across both models, I find no evidence of a causal effect of immigration exposure on trust. This result holds over a battery of robustness checks, including heterogeneity analysis, dynamic treatment effect specifications, and alternative scalings/measures of generalised trust. In doing so, I offer one of the first empirical attempts to causally bridge two previously separate literatures, and suggest that generalised trust may be less relevant than other social/cultural outcomes (e.g. political attitudes or crime perception) when designing immigration related policies.