Does democracy foster trust?

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may ABSTRACTThe level of trust inherent in a society is important for a wide range of microeconomic and macroeconomic outcomes. This paper investigates how individuals' attitudes toward social and institutional trust are shaped by the political regime in which they live. The German reunification is a unique natural experiment that allows us to conduct such a study. Using data from the German General Social Survey (ALLBUS) and from the German SocioEconomic Panel Study (SOEP), we obtain two sets of results. On one side, we find that, shortly after reunification, East Germans displayed a significantly less trusting attitude than West Germans. This suggests a negative effect of communism in East Germany versus democracy in West Germany on social and institutional trust. However, the experience of democracy by East Germans since reunification did not serve to increase levels of social trust significantly. In fact, we cannot reject the hypothesis that East Germans, after more than a decade of democracy, have the same levels of social distrust as shortly after the collapse of communism. In trying to understand the underlying causes, we show that the persistence of social distrust in the East can be explained by negative economic outcomes that many East Germans experienced in the post-reunification period. Our main conclusion is that democracy can foster trust in post-communist societies only when citizens' economic outcomes are right.Keywords: Social Trust, Institutional Trust, Political Regimes. JEL Classifications: P51, Z13. NON-TECHNICAL SUMMARYIn 1990, East and West Germany were reunited after more than four decades of separation. Before reunification, East Germans were governed by a communist regime that systematically violated the basic rights of many citizens. The freedom that people had was further undermined by the German Democratic Republic's State Security Service ("Stasi"). The Stasi kept files on an estimated six million people, and built up a network of civilian informants ("unofficial collaborators"), who monitored politically incorrect behaviour among other citizens. Since reunification, East Germans have experienced life in a market-based democracy, an environment West Germans had experienced since1945. This paper examines whether the levels of social and institutional trust have changed in response to the reunification of Germany. Our main aim is to understand how individuals' trust in other people and in l...

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