ETHNIC DIVERSITY AND TRUST

Abstract

Using data from U.S. states, I investigate the relationship between ethnic diversity and trust. I find a negative relationship between ethnic polarization and trust and a U‐shaped relationship between ethnic fractionalization and trust. According to my estimations, (a) going from an ethnic polarization index (PI) of 0 to an ethnic PI of 1 decreases trust by almost 12% points; and (b) trust is minimized when the ethnic fractionalization index is equal to 0.34. (JEL D74, J15, Z13)