Social trust and income of rural residents: Evidence from China

ABSTRACT

We examine the relationship between social trust and residential income in rural China by using two microeconomic survey datasets. Social indicators of trust are measured from three dimensions: personalized trust, or trust in relatives and friends; generalized trust, or trust in people other than relatives and friends and public trust, or trust in the state and public officials. Our results show that personalized trust can increase rural residents’ income, while generalized trust may reduce their income. In addition, a significant positive relation is found between public trust and income only in the West and East of China. Three underlying economic mechanisms are also identified: health effects, organizational learning effects, and insurance effects. Furthermore, we empirically assess the impact of the different types of social trust on sources of residential income. The results indicate that personalized trust enhances residents’ financial assets income, generalized trust raises business income, and public trust contributes to salary income.

KEYWORDS:

• Business income
• financial income
• rural china
• salary income
• social trust

JEL CODES:

• D10
• Q12

Acknowledgements

The study is supported by the National Social Science Foundation of China [21BJL034]. Authors’ names are listed in alphabetical order, and they both share the first author position.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ See the official announcement: http://www.gov.cn/xinwen/2021-02/25/content_5588879.htm.

² Public trust in this study refers to the social trust in public institutions and its officials. Some scholars also use the terminology of “institutional trust” as “public trust” (Hakhverdian and Mayne 2012)..

³ In the sample, householders must have an agricultural registered permanent residence and are within the township street of their current residence.

⁴ The CHIP database used in this paper does not measure the trust comprehensively, and it has been surveyed in fewer years.

Additional information

Funding

The work was supported by the National Social Science Foundation of China [21BJL034].