Ethnic Diversity and Trust: New Evidence from Australian Data

Citation data:

Economic Record, ISSN: 0013-0249, Vol: 92, Issue: 299, Page: 648-665

Publication Year:
2016
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Repository URL:
http://ro.uow.edu.au/buspapers/990
SSRN Id:
2879684
DOI:
10.1111/1475-4932.12295
Author(s):
Mendolia, Silvia; Tosh, Alex; Yerokhin, Oleg
Publisher(s):
Wiley-Blackwell
Tags:
Economics, Econometrics and Finance; Business
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article description
This paper investigates the relationship between neighbourhood ethnic and linguistic heterogeneity and individuals’ local and generalised trust. A wide literature across economics and sociology has recognised the importance of trust in facilitating economic growth and development. We use fixed effects and instrumental variable regression and control for a wide set of individual and local area characteristics. Our results show that a 1 standard deviation increase in ethnic and linguistic fractionalisation is associated with a decrease in local trust of about 0.12 standard deviations, while we do not find any significant relationship between heterogeneity and generalised trust.