Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96918
Authors: 
Tesei, Andrea
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 4718
Abstract: 
Existing studies of trust formation in U.S. metropolitan areas have found that trust is lower when there is more income inequality and greater racial fragmentation. I add to this literature by examining the role of income inequality between racial groups (racial income inequality). I find that greater racial income inequality reduces trust. Also, racial fragmentation is no longer a significant determinant of trust once racial income inequality is accounted for. This result is consistent with a simple conceptual framework where concurrent differences in race and income are especially detrimental for trust formation. I find empirical support for further implications deriving from this assumption. In particular, I show that racial income inequality has a more detrimental effect in more racially fragmented communities and that trust falls more in minority groups than in the majority group when racial income inequality increases.
JEL: 
H73
I31
J15
Document Type: 
Working Paper

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