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Abstract
This paper uses individual level data from the Japanese General Social Survey to examine how government size influences generalized trust. After controlling for the endogeneity of government size using instrumental variables, I found: (1) using all samples, government size is not associated with generalized trust, and (2) after splitting the sample into workers and non-workers, government size does not influence generalized trust for non-workers, whereas it significantly reduces generalized trust for workers. This suggests that workers, through their work experience, might have to face greater bureaucratic red tape coming from “larger government,” leading to negative externality effects on relationships of trust in the labor market.
Notes
Trust is associated with various economic outcomes such as tax compliance (Lassen Citation2007) and loan repayment (Cassar et al.Citation2007).
In transition countries, a larger government size reduces corruption (Goel and Budak Citation2006). Using various measures of government size, the relationship between government size and corruption is not stable (Glaeser and Saks Citation2006).
The conditions are the security of property rights, access to sound money, and freedom to exchange with foreigners.
Recently, government size has been investigated in terms of individual perception. For instance, researchers have attempted to tackle the question of how and to what extent the degree of life satisfaction is affected by government size (e.g. Bjørnskov et al. Citation2007, Citation2008a, Citation2008b; Yamamura Citation2009a).
A Japanese prefecture is roughly equivalent to a state in the US or a province in Canada.
The component ratio of Japanese in the 1996 population was 99 percent and suggests that Japan can be considered as a racially homogeneous society (Index Corporation Citation2006).
Banfield (1958) provided a similar argument based on the case of a southern Italian village.
Yamagishi and Yamagishi (Citation1994) defined what I called particularized trust as “mutual assistance.” Japanese society characterized by preferential treatments given to in-group members provides mutual assurance in closed and tightly knit relationships (Yamagishi and Yamagishi Citation1994).
“Agricultural-related public capital, fishing ports, flood control, and forest conservation have been over funded as a result of the lobbying activities of local-interest groups” (Doi and Ihori Citation2009: 181).
Jobs are divided into 21 groups: (1) agriculture, (2) forestry, (3) fisheries, (4) mining, (5) building, (6) manufacture, (7) electricity, gas, water supply, (8) transportation, (9) wholesale, (10) retail sale, (11) restaurant, (12) finance, insurance, (13) real estate business, (14) mass media, (15) information industry, (16) medical industry, (17) education, (18) law and account, (19) other service industries, (20) public sector, and (21) others. Job category dummies were constructed based on these groups.
Data for this secondary analysis, “Japanese General Social Surveys (JGSS), Ichiro Tanioka,” were provided by the Social Science Japan Data Archive, Information Center for Social Science Research on Japan, Institute of Social Science, University of Tokyo.
Gini data at the prefecture level are obtained every five years; as 1996 data are not available, I used 1994 data.
The Gini coefficient of each prefecture ranges from 2.66 (Shiga prefecture) to 3.80 (Okinawa prefecture). It is found that the Gini coefficient has a negative impact on the rate of respondents trusting neighbors in Japan (Yamamura Citation2008b). That is, income inequality leads to a decrease in particularized trust in Japan. From the standpoint of comparative study, it is important to investigate the effect of income inequality on generalized trust in this study.
Contrarily, there is an optimistic view that the openness of a society leads to the formation of generalized trust (Chan Citation2007). Chan (Citation2007) examined the impact of global integration on generalized trust and found the positive openness-trust relationship.
From another point of view, relatively lower trust can appropriately reflect a higher crime rate, and so in turn may bring about larger government.
The results are available upon request.
As argued in the second section, government size is not thought to have the same effect on different types of work. It is thus necessary to control for the difference in the relationship with government among industries. To control for the features of work respondents, job category dummies are added as independent variables when estimations using the worker sample are applied. These results are presented in columns 4 and 8.
As discussed in “Prefecture Government,” the effect of government size possibly reflects the per capita income of the prefecture. However, the result of GOVSIZE is unchanged while per capita income does not influence trust in the case that per capita income is included as an independent variable. These results are available upon request.
“Agricultural-related public capital, fishing ports, flood control, and forest conservation have been over funded as a result of the lobbying activities of local-interest groups” (Doi and Ihori Citation2009: 181).
In Japan, items subject to the local taxes, and the tax rates, are specified in the Local Tax Law. This is a national law; local governments have very little authority to set local tax rates or impose local taxes (Doi and Ihori Citation2009: 157).
The estimation results are not reported to save space. The results are available upon request.