Does Democracy Foster Trust?

Helmut Rainer and Thomas Siedler

No 2154, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The level of trust inherent in a society is important for a wide range of microeconomic and macroeconomic outcomes. This paper investigates how individuals’ attitudes toward social and institutional trust are shaped by the political regime in which they live. The German reunification is a unique natural experiment that allows us to conduct such a study. Using data from the German General Social Survey (ALLBUS) and from the German Socio-Economic Panel Study (SOEP), we obtain two sets of results. On one side, we find that, shortly after reunification, East Germans displayed a significantly less trusting attitude than West Germans. This suggests a negative effect of communism in East Germany versus democracy in West Germany on social and institutional trust. However, the experience of democracy by East Germans since reunification did not serve to increase levels of social trust significantly. In fact, we cannot reject the hypothesis that East Germans, after more than a decade of democracy, have the same levels of social distrust as shortly after the collapse of communism. In trying to understand the underlying causes, we show that the persistence of social distrust in the East can be explained by negative economic outcomes that many East Germans experienced in the post-reunification period. Our main conclusion is that democracy can foster trust in post-communist societies only when citizens’ economic outcomes are right.

Keywords: social trust; political regimes; institutional trust (search for similar items in EconPapers)
JEL-codes: P51 Z13 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2006-06
New Economics Papers: this item is included in nep-cbe, nep-cdm, nep-hpe, nep-pol and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published - published in: Journal of Comparative Economics, 2009, 37 (2), 251-269

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Related works:
Journal Article: Does democracy foster trust? (2009)
Working Paper: Does democracy foster trust? (2009)
Working Paper: Does Democracy Foster Trust? (2006)
Working Paper: Does democracy foster trust? (2006)
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