Ethnic Diversity and Trust: New Evidence from Australian Data

Silvia Mendolia, Alex Tosh and Oleg Yerokhin ()
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Oleg Yerokhin: University of Wollongong

No 9544, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper investigates the relationship between neighbourhood ethnic and linguistic heterogeneity and the formation of an individual's local and general trust. A wide literature across economics and sociology has recognised the importance of trust in facilitating economic growth and development and it is therefore important to investigate elements of social organisation that encourage or inhibit the development of trust. We use fixed effects and instrumental variable regression and control for a wide set of individual and local area characteristics to identify the effect of heterogeneity on trust formation. Our results show that increasing neighbourhood ethnic and linguistic fractionalisation is associated with a decrease in local trust of about 12% of a standard deviation in the model with fixed effects, while we do not find any significant relationship between neighbourhood heterogeneity and general trust.

Keywords: trust; social capital; ethnic fractionalization; ethnic heterogeneity; HILDA (search for similar items in EconPapers)
JEL-codes: J15 Z10 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2015-12
New Economics Papers: this item is included in nep-gro, nep-soc and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in Economic Record, 2016, 92 (299): 648-665.

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Journal Article: Ethnic Diversity and Trust: New Evidence from Australian Data (2016)
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