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

  • Mariangela Bonasia Department of Business and Economics University of Naples "Parthenope"
  • Rosaria Rita Canale Department of Business and Economics University of Naples "Parthenope"
  • Giorgio Liotti Department of Political Sciences University of Naples “Federico II”
  • Nicola Spagnolo School of Social Sciences Brunel University London
Keywords: Institutions, Trust, Economic indicators, Inequality, Eurozone, Crisis

Abstract

The paper investigates the role of economic indicators as determinants of trust in the European Central Bank (ECB), the European Commission (EC) and the European Parliament (EP) in eleven countries of the Eurozone, from 1999 to 2013, using country level data from the European Commission’s Eurobarometer survey. This paper aims to shed light particularly on the role played by income distribution, together with standard economic indicators such as unemployment and inflation, in the consolidation of supranational institutions. The empirical analysis also controls for financial market shocks, including domestic bond yields and stock market returns. The additional contribution is to analyze whether the sensitiveness of trust is strengthen during the recent crisis, associating binary dummies to explanatory variables. The main conclusions can be summarized as follows: a) income inequality negatively affects trust in the EC and the EP in normal times; in crisis times, this relation is strengthened and extended to the ECB for one of the two indexes of trust considered; b) inflation and unemployment significantly affect trust in all European Institutions after the crisis

DOI: http://dx.doi.org/10.5755/j01.ee.27.1.12581

Author Biographies

Mariangela Bonasia, Department of Business and Economics University of Naples "Parthenope"

Assistant professor in Economic Policy

Department of Business and Economic Studies

University of Naples “Parthenope”

Rosaria Rita Canale, Department of Business and Economics University of Naples "Parthenope"

Rosaria Rita Canale

Associate Professor of Economic Policy

Department of Business and Economic Studies

University of Naples “Parthenope”

Giorgio Liotti, Department of Political Sciences University of Naples “Federico II”

Research fellow in economics

Department of Political Sciences

University of Naples “Federico II”

 

Nicola Spagnolo, School of Social Sciences Brunel University London

Reader in Economics and Finance

School of Social Sciences
Brunel University London

Published
2016-02-25
Section
ECONOMICS OF ENGINEERING DECISIONS