Trust, welfare states and income equality: Sorting out the causality

Andreas Bergh, Christian Bjornskov

Research output: Contribution to journalArticlepeer-review

60 Citations (SciVal)

Abstract

The cross-country correlation between social trust and income equality is well documented, but few studies examine the direction of causality. We show theoretically that by facilitating cooperation, trust may lead to more equal outcomes, while the feedback from inequality to trust is ambiguous. Using a structural equation model estimated on a large country sample, we find that trust has a positive effect on both market and net income equality. Larger welfare states lead to higher net equality but neither net income equality nor welfare state size seems to have a causal effect on trust. We conclude that while trust facilitates welfare state policies that may reduce net inequality, this decrease in inequality does not increase trust. (C) 2014 Elsevier B.V. All rights reserved.
Original languageEnglish
Pages (from-to)183-199
JournalEuropean Journal of Political Economy
Volume35
DOIs
Publication statusPublished - 2014

Subject classification (UKÄ)

  • Economics

Keywords

  • Social trust
  • Inequality
  • Welfare state

Fingerprint

Dive into the research topics of 'Trust, welfare states and income equality: Sorting out the causality'. Together they form a unique fingerprint.

Cite this