Abstract

CUARTAS RICAURTE, Jorge. Inequality and Poverty as Generalized Trust Determinants?: Panel Data Analysis. Desarro. soc. [online]. 2016, n.76, pp.91-121. ISSN 0120-3584.  https://doi.org/10.13043/DYS.76.2.

Generalized trust has been considered a principal component of social capital and a major predictor of economic outcomes within a country. Evidence suggests that income inequality is a main predictor of generalized trust across countries. However, these results have been subject to criticisim because of endogeneity problems and because they ignore the importance of wealth, focusing only on the effect of inequality. In order to contribute to this discussion, I use cross-section data and instrument variables to resolve potential endogeneity. In addition, I use panel data for 130 countries in three periods, to estimate random and fixed effects models. My results show that an increase of one percentage point in the Gini index leads to a decrease of half percentage points of the people who report generalized trust within a country. Yet wealth, measured using the per capita GDP, has no effects on generalized trust.

Keywords : Generalized trust; social capital; inequality; poverty.

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