Publication Details

Mendolia, S., Tosh, A. & Yerokhin, O. (2016). Ethnic diversity and trust: new evidence from Australian data. The Economic Record, 92 (299), 648-665.


This paper investigates the relationship between neighbourhood ethnic and linguistic heterogeneity and individuals' local and generalised trust. A wide literature across economics and sociology has recognised the importance of trust in facilitating economic growth and development. We use fixed effects and instrumental variable regression and control for a wide set of individual and local area characteristics. Our results show that a 1 standard deviation increase in ethnic and linguistic fractionalisation is associated with a decrease in local trust of about 0.12 standard deviations, while we do not find any significant relationship between heterogeneity and generalised trust.

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