Ethnic Diversity and Trust: New Evidence from Australian Data
- Citation data:
Economic Record, ISSN: 1475-4932, Vol: 92, Issue: 299, Page: 648-665
- Publication Year:
- Economics, Econometrics and Finance; Business
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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.