Mikko Mäkinen (BOFIT) - Individual trust and wage

Mikko Mäkinen (BOFIT) - Individual trust and wage

Abstract
This paper studies the association between the levels of individual trust and individual economic performance. I distinguish between generalized trust, a proxy for beliefs about others' trustworthiness, and within-firm trust, i.e. trust in firm management and trust in colleagues. Using rich individual-level panel data for 2012-2019 from Russia, a low-trust country, and Mincerian wage regressions with a broad set of controls, the preliminary findings imply: (i) the high level of generalized trust is negatively associated with wage; (ii) the levels of trust in colleagues (horizontal trust) are both individually and jointly insignificantly associated with wage; and (iii) while the levels of trust in firm management (vertical trust) show a positively monotonic relationship with wage, this association does not hold if the sample is split into low- and high-wage groups.

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