Alessandro Belmonte (Marche Polytechnic University & CAGE) - Political Trust and Compliance: Evidence from the Panama Papers Leakage

BOFIT-seminaarit

BOFIT Seminar - Alessandro Belmonte (Marche Polytechnic University & CAGE) - Political Trust and Compliance: Evidence from the Panama Papers Leakage

Co-authors:  Giuseppe Spataro (Marche Polytechnic University & LUISS) and Davide Ticchi (Marche Polytechnic University)

Abstract
Trust in political institutions is crucial for ensuring voluntary compliance with state policies, including tax laws and regulations. We use the Panama Papers leak as a quasi-natural experiment and study the impact of the leak on political trust and citizen compliance by investigating whether revelations about politicians’ tax evasion influence public trust and, consequently, compliance with state rules. Using survey data from the Life in Transition Survey (LiTS), Eurobarometer, and the British Electoral Study, we document a sensible drop in institutional trust and increased perceptions of corruption in affected European and Central Asian countries. Our study also highlights a shift in civic attitudes, with individuals becoming more skeptical of authorities and more likely to question governmental decisions. These results indicate that political trust is not only an endogenous component of compliance but also highly sensitive to information shocks. The paper underscores the importance of transparency and accountability in maintaining institutional trust and effective governance. 

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