Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 988: Social Capital and Political Institutions: Evidence that Democracy Fosters Trust

Martin Ljunge ()
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Martin Ljunge: Research Institute of Industrial Economics (IFN), Postal: P.O. 55665, SE-102 15 Stockholm, Sweden

Abstract: This paper finds evidence that more democratic political institutions increase trust. Second generation immigrants with ancestries from 115 countries are studied within 30 European countries. Comparing individuals born and residing in the same country, those whose father was born in a more democratic country express higher trust than those whose father was born in a less democratic country. The results are robust to individual, parental, and ancestral country controls.

Keywords: Trust; Democracy; Political institutions; Cultural transmission; Social capital

JEL-codes: F55; H10; J62; Z13

12 pages, November 18, 2013

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