Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/126638
Authors: 
Mendolia, Silvia
Tosh, Alex
Yerokhin, Oleg
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 9544
Abstract: 
This paper investigates the relationship between neighbourhood ethnic and linguistic heterogeneity and the formation of an individual's local and general trust. A wide literature across economics and sociology has recognised the importance of trust in facilitating economic growth and development and it is therefore important to investigate elements of social organisation that encourage or inhibit the development of trust. We use fixed effects and instrumental variable regression and control for a wide set of individual and local area characteristics to identify the effect of heterogeneity on trust formation. Our results show that increasing neighbourhood ethnic and linguistic fractionalisation is associated with a decrease in local trust of about 12% of a standard deviation in the model with fixed effects, while we do not find any significant relationship between neighbourhood heterogeneity and general trust.
Subjects: 
trust
social capital
ethnic fractionalization
ethnic heterogeneity
HILDA
JEL: 
J15
Z10
Document Type: 
Working Paper

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