The impact of welfare states on social trust formation : a multidimensional approach

Social capital, Social trust, Crowding-out hypothesis, Welfare state, Social spending. - The crowding-out hypothesis asserts that the state development tends to erode social capital, that is voluntary, familial, communal and other interpersonal ties become weaker; people lose the sense of moral and responsibilities and they will have less trust in their fellows or institutions. In analyzing this relationship empirically, welfare states are usually operationalized through total social spending. This measure of welfare state development does not fully reflect all the specificities of the state intervention in societal arrangements. The main objective of this study is to check if recognizing a multidimensional character of welfare state activities helps find evidence that supports the crowding - out hypothesis. The multidimensionality is formed around three axes: functional, outcome, and qualitative. The functional dimension takes account of the type of risks social policies cover. The outcome dimension is based on a disaggregation of Esping-Andersens welfare regime typology and assesses the effects of decommodification levels and the nature of stratification mechanisms on social trust indexes. The qualitative dimension investigates whether certain characteristics of welfare states can predefine levels of social trust among individuals. The analysis is based on the World Values Survey data from wave 1999-2000 for 18 OECD countries. The results obtained provide more evidence of crowding-in than crowding-out. Furthermore, empirically we identify two channels for crowding-in in social trust, which are supported by all the three dimensions. Firstly, it happens through the redistributive function of social policies: a more equal income distribution in a country increases an individuals willingness to trust. Secondly, the quality of welfare state institutions explains some of the effects of social policies on social trust: in corrupt systems, which are known to tolerate bribes and which do not adhere to any norms of impartiality, trust cannot thrive.