“UNFAIR” INEQUALITY AND POLITICAL TRUST

Abstract

The relationship between objective inequality (income inequality and “unfair” inequality) and political trust in developed and developing countries is analyzed in this paper. The author specifies and estimates multilevel linear regression models and corrects for bias in the coefficient estimates due to outliers. To ensure the comparability and reliability of the econometric results, three alternative sets of estimates for “unfair” inequality are considered: estimates from inequality of opportunity, from intergenerational persistence, and from intergenerational mobility. The main results indicate that there is compelling evidence for erosion of trust caused by income inequality and “unfair” inequality in developed European countries. But in post-Soviet states and other developing countries, objective inequality and political trust are not closely related (“unfair” inequality has a weak negative impact on political trust). In these countries, perceptions of equality of opportunity become a more reliable correlate of political trust. It is also demonstrated that wealthier households are more loyal to political institutions. This is the case for both developed and developing economies. In developed European states, however, the relationship between individual well-being and political trust is mediated by the degree of income inequality and “unfair” inequality. The author concludes that in developed European countries the relationship between income inequality and political trust does not depend upon the level of “unfair” inequality.