Trust in Institutions and Income Inequality in the Eurozone: The Role of the Crisis

Bonasia, Mariangela; Canale, Rosaria Rita; Liotti, Giorgio; Spagnolo, Nicola

doi:10.5755/j01.ee.27.1.12581

Cited by 4 publications

(3 citation statements)

References 38 publications

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“…Meanwhile, trust in others, trust in the legal system, cooperation, the importance of following traditions, customs or rules have a negative impact on the innovation performance of CEECs. These results are in line with the OECD ( 2014), who underlines that if the level of trust in institutions declines, the entire economic system may be weakened (Bonasia et al, 2016), in contrast to Wang et al (2019), who argue that formal institutions positively affect the relationship between network centrality and innovation performance.…”

Section: Discussionsupporting

confidence: 87%

“…Informal institutions such as trust, respect for others and confidence in individual self-determination encourage social interaction or reduce transaction costs, and thus may influence innovation performance as a result, as Tabellini (2010) proved based on research into 69 regions in eight European countries such as France, Germany (except East Germany and Berlin), the United Kingdom, Italy, the Netherlands, Belgium, Spain and Portugal. Moreover, based on research on 11 Eurozone countries -namely Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal and Spain -from 1999 to 2013, Bonasia et al (2016) highlight the fact that trust in European institutions such as the European Central Bank, the European Commission or the European Parliament play a significant role in economic, political or social stability, which are key factors in high innovation performance.…”

Section: Informal Institutionsmentioning

confidence: 99%

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The Impact of Interplay between Formal and Informal Institutions on Innovation Performance: Evidence from CEECs

Godlewska

2021

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Formal and informal institutions matter in the context of the innovation performance of Central and Eastern European countries (CEECs). The purpose of the research was to investigate whether the interplay between formal and informal institutions has a positive, negative or neutral impact on the innovation performance of CEECs, and if formal or informal institutions alone also have a positive, negative or neutral influence on the innovation performance of CEECs. The research is based on informal institutions of CEECs such as trust, traditions, customs, creativity or cooperation, and formal institutions of CEECs such as law, formal rules, or science, technology and innovation policy (STIP). The research methodology focuses on secondary statistical data from 18,808 surveys from the European Social Survey Round 9 (2018) edition 2.0 for informal institutions and from 1090 innovation policies of European Commission and OECD STIP Compass and 414,073 notices of awarded tenders of the European Union Tenders Electronic Daily for formal institutions. Innovation performance was measured by the Summary Innovation Index (SII) of the European Innovation Scoreboard 2019. The findings show that informal institutions such as trust in others, trust in the legal system, the importance of following traditions and customs or cooperation among citizens of CEECs, as well as interplay between informal institutions such as trust in the legal system and formal institutions such as obedience to rules among citizens of CEECs have a negative impact on the innovation performance of the national economies of CEECs. Meanwhile, the variety of policy theme areas and creativity among citizens of CEECs have a positive impact on the innovation performance of the national economies of CEECs.

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Section: Discussionsupporting

confidence: 87%

Section: Informal Institutionsmentioning

confidence: 99%

The Impact of Interplay between Formal and Informal Institutions on Innovation Performance: Evidence from CEECs

Godlewska

2021

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“…Income inequality negatively affects trust in European Institutions before the crisis, but it becomes exacerbated after it. Inflation and unemployment significantly affect trust in all European Institutions after the crisis (Bonasia, Canale, Liotti et al, 2016). The rise in unemployment in Greece, Portugal, Ireland, and, especially, in Spain, contributed markedly to a pronounced fall in institutional trust (Roth, Nowak-Lehmann & Otter, 2013).…”

Section: Economic Inequalities and Trustmentioning

confidence: 99%

Economic crisis and social trust: Reviewing the effects of economic polarisation on social and institutional confidence

Torrente

Caïs

Bolancé

2019

Social Science Information

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The economic crisis of 2008 led to a significant erosion of trust in the countries that were hit hardest. However, whether this fall can best be explained by external economic factors or by the lack of response on the part of the institutions to civic needs and demands is unclear. This study uses the extreme case of Spain to bring new insights to this debate. Its aim is to analyse, in comparison with perceived institutional performance and other factors, the effect of increasing economic inequality and its polarisation on levels of social and institutional trust. The study examines the respective impact of these factors upon different social groups according to their degree of exposure to the effects of the crisis. It uses a simultaneous equations model to jointly examine interpersonal and institutional effects. Our results show that the social groups most severely affected by the recession lose a great deal of trust in others. We also find that polarisation of economic conditions has different effects depending on the institution. Institutional trust seems to vary according to the interest of different groups, but the economic position is an underlying factor, especially for specific segments of the population. Without calling into question the importance of institutional performance, our research sheds new light on the importance of economic polarisation and its joint impact on social and institutional trust. We suggest that, in severe economic recession scenarios, rising inequalities have a direct impact on the institutional trust of certain social groups and deteriorate a lot interpersonal confidence among the most disadvantaged.

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Disentangling the Causal Structure Between Social Trust, Institutional Trust, and Subjective Well-Being

Glatz

Schwerdtfeger

2022

Soc Indic Res

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Previous research indicates a positive relation between social trust, institutional trust and subjective well-being. Besides theoretical assumptions and cross-sectional relations, only few studies so far examined the causal structure between these concepts. However, previous studies showed contradictory results, possibly due to different methods and datasets used. Hence, we analyzed the causal structure between the three concepts on the aggregate country-level using the European Social Survey, which offers a total of 217 observations from 30 countries, nested in nine time-points between 2002 and 2018. We targeted a causal effect by using a multilevel bivariate cross-lagged analysis. This way we analyzed if previous values of the respective explanatory variable predicts future values of the respective criterion variable. Using this method, we were able to (1) separate the relevant within-country from the between-countries effect, (2) control for different effects in different countries, (3) control for covariates as well as for autoregression of the respective criterion variable over time, and (4) control for residual correlation between the respective criterion variables. Our results suggest a causal effect from subjective well-being to social trust, but little evidence for a reverse causal pathway. Further, we found no effect from social trust and subjective well-being on institutional trust and only small but negative effects vice versa. The results suggest treating social and institutional trust not as preconditions of subjective well-being, but rather as independent facets for the quality of life of a society as already implemented by the OECD’s better-life index, amongst others.

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Trust in Institutions and Income Inequality in the Eurozone: The Role of the Crisis

Cited by 4 publications

References 38 publications

The Impact of Interplay between Formal and Informal Institutions on Innovation Performance: Evidence from CEECs

The Impact of Interplay between Formal and Informal Institutions on Innovation Performance: Evidence from CEECs

Economic crisis and social trust: Reviewing the effects of economic polarisation on social and institutional confidence

Disentangling the Causal Structure Between Social Trust, Institutional Trust, and Subjective Well-Being

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