Scandinavian Working Papers in Economics
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Research Institute of Industrial Economics (IFN) Working Paper Series

No 673:
Inequality and Trust in Sweden: Some Inequalities are More Harmful than Others

Magnus Gustavsson () and Henrik Jordahl ()

Abstract: We present new evidence on the influence of income inequality on generalized trust. Using individual panel data from Swedish counties together with an instrumental variable strategy, we find that differences in disposable income, and especially differences among people in the bottom half of the income distribution, are associated with lower trust. The relationship between income inequality and trust is particularly strong for people with a strong aversion against income differentials. We also find that the proportion of people born in a foreign country is negatively associated with trust.

Keywords: Trust; Social capital; Inequality; (follow links to similar papers)

JEL-Codes: C23; D31; Z13; (follow links to similar papers)

32 pages, November 14, 2006

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This paper is published as:
Gustavsson, Magnus and Henrik Jordahl, (2008), 'Inequality and Trust in Sweden: Some Inequalities are More Harmful than Others', Journal of Public Economics, Vol. 92, No. 1-2, pages 348-365

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