Ethnic Diversity, a Desolation Row for Interpersonal Trust?

Abstract: In this paper we will investigate whether the ethnic composition of a county affects their trust. More specifically we will answer the question: does the ethnic composition affect the level of trust in Sweden and are there any specific factors that increase this effect? In order to do this we use data on Swedish citizens from the year 2001 to the year 2012. As an approximation for ethnicity we use the individuals country of birth and to estimate trust we use two different measures: general trust and local trust. We also collected numerous of context variables to control for unwanted effects. Using a multiple regression analysis we isolate the impact of ethnic heterogeneity on trust. In addition to this we tested for several interaction effects to see if some factors are especially harmful on trust when combined with ethnic heterogeneity. Starting with a paper by Putnam (2007) there has been a debate in Europe regarding whether ethnic heterogeneity affect the level of trust and much research on the subject has been published. However, our paper contributes to this research in two ways: It looks at the relation between the change as well as the level of ethnic heterogeneity on trust and with the basis in the theories from Lipset and Rokkan (1967) we check for interaction effect that might increase the negative effect on trust. Our study shows that ethnic diversification has a significant negative effect on local trust while no significant conclusions can be made when it comes to general trust. No significant interaction effects are found.