Individual Trust: Does Quality of Public Services Matter?

Abstract

This paper contributes to the literature on the determinants of social capital by investigating how the quality of local services influences individual’s generalized trust and trust in local government. Using data from the Italian National Statistic Office survey “Aspetti della vita quotidiana”, after building a measure for local services’ quality, we study its effect on individual’s social capital using linear regressions techniques. Our results suggest that good local public services affect positively individual’s social capital, the effect being stronger for trust in local institutions. To deal with possible endogeneity issues, the robustness of our results is tested using two-step GMM estimation, while the procedure proposed by Altonji et al. (2005) is used to study the sensitivity to omitted variables. Finally, the paper extends the analysis to further social capital measures (family ties, network social capital and trust in central government) and to alternative quality measures. We also test the existence of age related differences in the influence of public services’ quality on individual trust measures.

Keywords: trust, quality of public services, IV estimation

JEL Classification: C26, Z10, H70