Government size and trust

Yamamura, Eiji (2010): Government size and trust.

Abstract

This paper uses individual level data (the Japanese General Social Survey, 2001) to examine how government size influences generalized trust. After controlling for income inequality, population mobility, city size and various individual characteristics, I found: (1) Using all samples, government size is not associated with generalized trust, and (2) After splitting the sample into worker and non-worker samples, government size does not influence generalized trust for non-workers whereas it significantly reduces generalized trust for workers. This suggests that workers, through their work experience, might confront the greater bureaucratic red tape coming from “larger government”, leading to negative externality effects on the trustful relationship in the labor market.

• Item Type: MPRA Paper
• Language: English
• Keywords: Government size; Generalized trust
• Subjects: D - Microeconomics > D3 - Distribution > D30 - General; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z13 - Economic Sociology ; Economic Anthropology ; Social and Economic Stratification

References

Alesina, A., & La Ferrara, E. (2002). Who trust others? Journal of Public Economics, 85, 207-234.

Angelopoulos, K., Pilippopoulos, A., & Tsionas, E. (2008). Does public sector efficiency matter? Revisiting the relation between fiscal size and economic growth in world sample. Public Choice, 137, 245-278.

Asahi Shimbun. (2004). Minryoku: TODOFUKEN-BETSU MINRYOKU SOKUTEI SHIRYOSHU (CD-ROM edition), Asahi-Newspaper, Tokyo.

Asanuma, B. (1989). Manufacture-supplier relationships in Japan and the concept of relation specific skill. Journal of Japanese & International Economics, 3, 1-30.

Bansfield,E.C. (1958). The moral basis of a backward society, New York: Free Press.

Beugelsdijk, S., de Groot, H.L.F., & van Schaik. (2004). Trust and economic growth: a robustness analysis. Oxford Economic Papers, 56, 118-134.

Berggren, N., & Jordahl, H. (2006). Free to trust: economic freedom and social capital. Kyklos, 59, 141-169.

Bjørnskov, C. (2006). Determinants of generalized trust: A cross-country comparison. Public Choice, 130, 1-21.

Bjørnskov, C., Dreher, A., & Fischer, J.A.V. (2007).The bigger the better? Evidence of the effect of government size on life satisfaction around the world. Public Choice, 130, 267-292.

Bjørnskov, C., Dreher, A., & Fischer, J.A.V. (2008a). Cross-country determinants of life satisfaction: exploring different determinants across groups in society. Social Choice and Welfare, 30, 119-173.

Bjørnskov, C., Dreher, A., & Fischer, J.A.V. (2008b). On decentralization and life satisfaction. Economics Letters, 99 , 147-151.

Buchanan, J.M., & Wagner, R.E. (1977). Democracy in deficit: The political legacy of lord Keynes. New York: Academic Press.

Cassar, A., Crowley, L., and Wydick, B. (2007). The effect of social capital on group loan repayment: Evidence from field experiments. Economic Journal, 117, F85-F106.

Chan, K.S. (2007). Trade, social values, and the generalized trust. Southern Economic Journal, 73, 733-753.

Dar, A.A., & Amirkhalkhali, S. (2002). Government size, factor accumulation, and economic growth: Evidence from OECD countries. Journal of Policy Modeling, 24, 679-692.

Doi, T., & Ihori, T. (2002). Fiscal reconstruction and local interest group in Japan. Journal of Japanese and International Economies, 16, 492-511.

Doi, T., & Ihori, T. (2009). The public sector in Japan: Past development and future prospects. Cheltenham: Edward Elgar.

Easterly, W., & Rebelo, S. (1993). Fiscal policy and economic growth: An empirical investigation. Journal of Monetary Economics, 32, 417-438.

Fischer, J.A.V. & Torgler, B. (2006). The effect of relative income position on social capital. Economics Bulletin, 26 (4), 1-20.

Fölster, S., & Herekson, M. (2001). Growth effects of government expenditure and taxation in rich countries. European Economic Review, 45, 1501-1520.

Fukuyama, F. (1995). Trust: the social virtues and creation of prosperity. London: Hamish Hamilton.

Glaeser, E.L., Laibson, D., Scheinkman, J.A., & Soutter, C.L. (2000). Measuring Trust. Quarterly Journal of Economics, 115, 811-846.

Glaeser, E.L., & Saks, R.E. (2006). Corruption in America. Journal of Public Economics, 90, 1053-1072.

Goel, R.K. & Nelson, M.A. (1998). Corruption and government size: a disaggregated analysis. Public Choice, 97, 107-120.

Goel, R.K.& Budak, J. (2006). Corruption in transition economies: effects of government size, country size and economic reforms. Journal of Economics and Finance, 30(2), 240-250.

Gustavsson, M., & Jordahl, H. (2008). Inequality and trust in Sweden: Some inequalities are more harmful than others. Journal of Public Economics, 92, 348-365.

Hayami, Y. (2001). Development economics: From poverty to the wealth of nations. (second edition). New York: Oxford University Press.

Index Corporation. (2006). Chiiki toukei 2006 (CD-ROM edition), Index corporation, Tokyo.

Knack, S. & Keefer, P. (1997). Does social capital have an economic payoff? A cross-country investigation. Quarterly Journal of Economics, 114, 83-116.

Knack, S. (1997).Groups, growth and trust: Cross-country evidence one the Olson and Putnam hypothesis. Public Choice, 117, 341-355.

Lassen, D.D. (2007). Ethnic divisions, trust, and the size of the informal sector. Journal of economic behavior and organization,63, 423-438.

Leigh, A. (2006a). Does equality lead to fraternity? Economics letters, 93, 121-125.

Leigh, A. (2006b). Trust, inequality, and ethnic heterogeneity, Economic Record, 82, 268-280.

Mauro, P. (1995). Corruption and growth. Quarterly Journal of Economics, 110, 681-712.

Mendoza, E.G., Milesi-Ferretti, G.M., & Asea, P. (1997). On the ineffectiveness of tax policy in altering long-run growth: Harberger’s superneutrality conjecture. Journal of Public Economics, 66, 99-126.

Niskanen, W. A. (1971). Bureaucracy and representative government, Aldine Atherton, Chicago.

Peden, E.G., & Bradley, M.D. (1989). Government size, productivity, and economic growth: The postwar experience. Public Choice, 61, 229-245.

Putnam, R. (1993). Making democracy work. Civic traditions in modern Italy. Princeton, NJ, Princeton University Press.

Putnam, R. (2000). Bowling Alone: The Collapse and Revival of American Community, A Touchstone Book, New York.

Ramseyer, J.M. & Rosenbluth, F.M. (1997). Japan’s Political Marketplace, Harvard University Press, Cambridge.

Rodrik, D. (1997). Has Globalization Gone too Far? Institute for International Economics, Washington.

Sønderskov, K.M. (2009). Different goods, different effects: Exploring the effects of generalized social trust in large-N collective action. Public Choice, 140, 145-160.

Statistics Bureau of the Ministry of Internal Affairs and Communications. (various year). Zenkoku shohi zhittai chosa. Tokyo: Statistics Bureau of the Ministry of Internal Affairs and Communications.

Tachibanaki, T. (2005). Confronting income inequality in Japan: A comparative analysis of causes, consequences, reform. MIT Press, London.

Uslaner, E. M. (2002). The Moral Foundations of Trust, Cambridge University Press, New York.

Whiteley, P. (2000). Economic growth and social capital. Political Studies, 48, 443-466.

Yamagishi, T., & Yamagishi, M. (1994). Trust and commitment in the United States and Japan. Motivation and Emotion, 18, 129-166.

Yamamura, E., (2008a). The effects of inequality, fragmentation, and social capital on collective action in a homogeneous society: analyzing responses to the 2005 Japan census. Journal of Socio Economics, 37(5), 2054-2058.

Yamamura, E. (2008b). Determinants of trust in a racially homogeneous society. Economics Bulletin, 26(1), 1-9.

Yamamura, E, (2009a). The influence of government size on economic growth and life satisfaction. A case study from Japan, MPRA Paper 18439.

Yamamura, E. (2009b). Dynamics of social trust and human capital in the learning process: The case of the Japan garment cluster in the period 1968–2005. Journal of Economic Behavior & Organization, 72, 377-389.

Zak, P.J. & Knack, S. (2001). Trust and growth. Economic Journal, 111, 295-321.