Department of Economics and Business Economics

Christian Bjørnskov

Trust, Welfare States and Income Equality: Sorting out the Causality

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaperJournal articleResearchpeer-review

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.
Original languageEnglish
JournalEuropean Journal of Political Economy
Volume35
Pages (from-to)183-199
Number of pages17
ISSN0176-2680
DOIs
Publication statusPublished - 2014

Bibliographical note

Campus adgang til artiklen / Campus access to the article

    Research areas

  • Social trust, Inequality, Welfare state

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