Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282668 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16541
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
What are the broad societal implications of inflation and unemployment? Analyzing a dataset of over 1.9 million individuals from 156 countries via the Gallup World Poll spanning 2005 to 2021, alongside macroeconomic data at the national level, we find that both inflation and unemployment have a negative link with confidence in financial institutions. While inflation is generally unassociated with confidence in government and leadership approval, unemployment still has a strong negative association with these outcomes. While we find no gender differences in the consequences of inflation and unemployment for confidence in political and financial institutions, the associations we document are more substantial for the cohorts that are likely to bear a disproportionate burden from inflation and unemployment—the middle-aged, lower-educated, and unmarried individuals, and for those living in rural areas. Uncertainty about the country's economic performance and one's own economic situation are the primary channels behind the associations we identify. These findings hold significant implications for policymakers, Central Banks, and public discourse, necessitating targeted strategies to alleviate the social consequences of inflation and unemployment.
Subjects: 
inflation
unemployment
trust
confidence in institutions
Gallup World Poll
JEL: 
D12
D83
E31
E58
Document Type: 
Working Paper

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