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Trust and Racial Income Inequality: Evidence from the U.S

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  • Andrea Tesei

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. I also show that racial income inequality has a more detrimental effect in more racially fragmented communities and that trust falls more in minority groups when racial income inequality increases. The results hold under both least squares and instrumental variable estimation.

Suggested Citation

  • Andrea Tesei, 2015. "Trust and Racial Income Inequality: Evidence from the U.S," CEP Discussion Papers dp1331, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1331
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    Cited by:

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    4. Eric D Gould & Alexander Hijzen, 2016. "Growing Apart, Losing Trust? The Impact of Inequality on Social Capital," IMF Working Papers 2016/176, International Monetary Fund.

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    More about this item

    Keywords

    Trust; racial income inequality; U.S.;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • Z10 - Other Special Topics - - Cultural Economics - - - General
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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