Working Paper Series,
Research Institute of Industrial Economics

Abstract: Social trust is linked to many desirable economic and social outcomes, but the causality between trust and institutions is debated. Using new data from a representative sample of 2,668 Swedish expatriates (surveyed in the SOM Institute’s Swedish Expatriate Survey 2014), we use variation in time spent in the new country to infer about the effect of country level institutions and norms (such as corruption perceptions, average trust levels and various aspects of economic freedom) on social trust. The results suggest that individual trust suffers in countries with high corruption, low trust and low legal quality. The effect is relatively small, occurs mainly during the first 3 to 10 years and is observed only among those aged less than 30 at the time of arrival in the new country. The results are robust to controlling for a large array of individual characteristics (including age), and support the view that social trust is sensitive to events that occur early in life. In contrast, after the age of approximately 30, trust seems to be a highly resilient personal trait.

Keywords: Trust; Social norms; Institutions; Migration

JEL-codes: D13; D83; J62; Z13

Language: English

26 pages, September 7, 2016

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